Tough Quarter for Data Center Stocks

Shares of data center companies tend to be more volatile than the broader market. That held true in the third quarter of 2011, which was a tough time for Wall Street and a tougher time for the data center sector. Every stock in our Data Center Investor chart fell by at least 10 percent in the three-month period ending Sept. 30, with six of the 10 companies dropping 20 percent or more.

The Dow Jones lost 12.1 percent in the quarter, while the broader market, as measured by the Standard & Poor’s 500 index,was off 14.3 percent for the quarter.

The best performers were the sector’s standardbearers: Digital Realty Trust (DLR), the largest data center REIT, was lower by 10.7 percent, while the largest colocation provider, Equinix (EQIX), was off by 12.1 percent.  CoreSite Realty (COR) also kept pace with the Dow, dipping 12.5 percent.

It was a brutal quarter for companies in the content delivery sector, as shares of Akamai (AKAM) were off 36 percent, while Limelight Networks (LLNW) was the worst performer for the quarter, seeing nearly half its value wiped out after reporting disappointing earnings.

Managed hosting and cloud computing specialist Savvis left the chart, as it was acquired by CenturyLink (CTL), which we’ve added. With its acquisitions of Qwest and Savvis, CenturyLink now operates 48 data centers in North America, Europe and Asia with more than 1.9 million square feet of raised floor space.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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