Providers focused on cloud computing were the best performers among public companies in the data center sector in 2010, with content delivery networks (CDNs) also scoring huge gains. Meanwhile, the real estate investment trusts (REITs) focused on the data center sector lagged the rest of the sector.
Leading the pack was Terremark Worldwide (TMRK). The Miami company,which has staked out a leadership position in cloud hosting for government agencies, saw its shares soar 89 percent in 2010. Other prominent cloud computing specialists also finished near the top of the list, including Savvis Communications (SVVS) and Rackspace Hosting (RAX). Savvis investors were up 81 percent on the year, as the company rolled out a suite of cloud services that spanned all three segments of the cloud market (infrastructure, platform and software as a service). Rackspace has been one of the leading success stories in the cloud hosting space, adding more than 38,000 customers over the past year. Shares of RAX gained nearly 51 percent for 2010.
Here’s a look at our Data Center Investor leaderboard for the full year 2010:
For comparison purposes, the Dow Jones Industrial Average was up 11 percent on the year, while the S&P 500 gained 13 percent and the NASDAQ Composite soared17 percent.
In other sectors, it was a good year for CDN service providers Akamai Technologies (AKAM) and Limelight Networks (LLNW) which appreciated 85 percent and 48 percent, respectively, as investors grew comfortable with ongoing demand for content delivery services.
The overall gains for the data center sector in 2010 were held back by a tough fourth quarter, in which many stocks in the sector were pummelled amid analyst concerns about demand and pricing in the colocation and wholesale data center space. Shares of colocation bellwether Equinix (EQIX) were hardest hit, plunging 25 percent in a single session on Oct. 5 after the company lowered its revenue guidance for the year.
The concerns about Equinix prompted selloffs of 7 to 10 percent in other data center stocks, especially the data center REITs, historically among the sector’s best performers. The trend is easily seen in our chart for the fourth quarter of 2010, as Digital Realty Trust (DLR), DuPont Fabros Technology (DFT) and CoreSite Realty (COR) all had double-digit performance losses. The Equinix news came just two weeks after a successful IPO for CoreSite.
Terremark also led the fourth quarter performers with a 25 percent gain, while three of the industry’s turnaround stories delivered gains for investors. Chief among these was Internap Network Services (INAP), which saw its shares gain 24 percent as the company continued to boost margins by refocusing its data center operations on company-owned facilities rather than partners. SGI saw continued gains from its initiatives in the market for high performance computing, gaining 16 percent, while managed hosting provider NaviSite (NAVI) was up 10 percent on the quarter as its sold off assets and focused on its enterprise business.
For 2011 we will be expanding our Data Center Investor stock performance charts to tracking different segments within the market for data center services, offering a broader view of the sector and more apples-to-apples comparisons of the public companies in the field.
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