Switch & Data Lines Up $100M for Expansion

Colocation specialist Switch and Data (SDXC) has obtained $100 million of debt financing from a syndicate of banks arranged by RBC Capital Markets, and will use the money to accelerate its data center expansion program, including plans to complete a major data center in downtown Atlanta.

Switch and Data said the decision to seek expansion funding was driven by strong demand in its sales pipeline. “Improved bookings combined with increasing customer demand afford us the opportunity to accelerate our investments for growth,” said Keith Olsen, CEO and President of Switch and Data. “Network-centric companies are rolling out multiple new service offerings which continue to demand more infrastructure and interconnection capacities across more local, regional and global markets.”

Roundup: Switch & Data, Global Crossing

Here’s a roundup of several data center stories in the news on Tuesday:

• Switch and Data reports 2nd quarter results: Internet exchange and colocation provider Switch & Data reported a profit of $1.87 million in the 2nd quarter of 2009, up 64% from last year. Rising customer demand and margins and an 18.8% increase from 2008 in recurring revenue accounted for the strong second quarter momentum. The number of customers in the quarter grew by 64 from last year, according to company released figures. The company lowered its guidance on total revenue for 2009 to $206 million to $208 million, down slightly from previous guidance of $207 million to $210 million.  But Switch & Data also raised its guidance on EBITDA (earnings before interest, taxes, depreciation and amortization) from a range of $71 million to $73 million to a new range of $74 to $75 million. Shares of Switch and Data (SDXC) are down 75 cents to  $12.78 in early trading Wednesday, a decline of about 5 percent.
• Global Crossing also reported 2nd quarter results Tuesday. Consolidated revenue was reported at $633 million, down from $654 million in the comparable quarter last year. Operating Income Before Depreciation and Amortization (OIBDA) for the quarter was $93 million. Global Crossing provides guidance of $2.5 to $2.6 billion in revenue for 2009.

Solid Earnings for Switch & Data

Switch & Data (SDXC) posted solid earningsTuesday, reporting earnings and revenues in line with Wall Street expectations. The Tampa-based colocation and interconnection specialist reported a loss of 6 cents per share on revenues of $47.1 million, up 18 percent from the previous year. The company also updated its guidance for fiscal year 2009, projecting revenues of $207 to 210 million, slightly above the analyst consensus.

Switch and Data said new space in its New Jersey data center is about 40 percent filled. The North Bergen facility will be a key focus of the company’s growing push into hosting low-latency financial trading applications.

In the conference call with analysts, Switch & Data CEO Keith Olsen noted a modest pickup for activity in the SME sector.

Atlantic Metro Expands at Switch & Data

Manageed colocation and IP transit provider Atlantic Metro Communications has expanded its network, adding Points of Presence (PoPs) at Switch and Data facilities in North Bergen, N.J. and at 111 8th Avenue in New York City. Atlantic Metro said it will use Switch and Data’s PAIX Internet exchange to boost Internet connectivity for its customers.

“Switch and Data’s facility provides us with a secure, state-of-the-art facility where we can confidently host our customers’ infrastructure,” said Stephen Klenert, CEO of Atlantic Metro Communications. “The site offers the ideal mix of flexible floor space and power density that is required by Atlantic Metro to ensure our customers’ managed infrastructure is cost-effective, flexible and secure.”

PAIX: A Key Hub, From Alta Vista To Facebook

A look at the battery room in the Switch and Data PAIX data center in Palo Alto, Calif.

Last week I noticed a link touting an “Exclusive Look at Facebook’s Main Data Center” and clicked through, only to encounter photos of the building housing the Palo Alto Internet Exchange (PAIX). Apparently Facebook’s mojo has made its presence the headline-grabber in any facility where it houses equipment. But veterans of the data center industry know that the PAIX, which is now operated by Switch and Data (SDXC), has a fabled history that predates the social networking boom.

In 1996 the PAIX facility was established as the first major carrier-neutral Internet exchange point, providing connectivity from multiple fiber providers. That bucked the trend at a time when most major exchange points were owned or controlled by telecom companies. The Palo Alto exchange was launched in the incubator labs of Digital Equipment, and its founders included Jay Adelson (who went on to found Equinix and Digg) and Paul Vixie (author of BIND and a key player in the DNS industry).

“The primary reasons the Palo Alto exchange existed was for interconnections,” said Drew Leonard, a PAIX veteran who is now director product marketing for Switch and Data. “It wasn’t a server farm. It was really customers who wanted access to the PAIX peering fabric.”

That peering operation started in the basement, which quickly got crowded as demand for space grew. “We were putting people everywhere just to fit them in,” Leonard recalled. The technical space was soon expanded to the first floor, and has since grown to encompass nearly the entire building.

Switch and Data Expands at Westin Building

Colocation and interconnection specialist Switch and Data(SDXC) has expanded its data center space at the Westin Building, the largest carrier hotel in Seattle. The new suite adds nearly 9,000 gross square feet of additional capacity to Switch and Data’s existing facility at the Westin, where it now operates 65,000 square feet of space.

Switch and Data said the expansion was needed to meet high customer demand for interconnections at The Westin Building, a major communications hub for IP traffic traversing the Northern Transpacific undersea fiber route between North America and Asia.

The new space can support power densities of 200 watts per square foot, and was finished in December, completing Switch and Data’s 2008 capacity expansion plan.

“Our Seattle market expansion builds on our plan to help our customers accelerate their Internet-centric businesses with high performance and availability,” said Ernie Sampera, Senior VP of Marketing for Switch and Data. “Switch and Data facilities give our customers access to a critical mass of network and bandwidth providers across the broadest footprint of key communications hub markets in North America.”

Switch and Data Taps Credit Line for $22M

Switch and Data (SDXC) has borrowed an additional $22.5 million through an existing credit line, according to a filing with the Securities and Exchange Commission. The company said it use the funds to support investments in its data center network in 2009, including the continued expansion of its new data center in North Bergen, New Jersey.

The $22.5 million was a delayed draw term loan built into Switch and Data’s March 2008 debt financing from a syndicate of banks led by RBC Capital Markets and GE Corporate Lending. The agreement included an initial $120 million term loan, which was used to fund the lease for the New Jersey site.

Switch and Data Raises 2008 Guidance

Colocation provider Switch and Data Facilities (SDXC) said its third quarter results “surpassed our expectations” and again increased its revenue guidance for 2008. The Tampa-based company reported a net loss of $32,000 on revenues of $44.1 million for the three-month period ending Sept. 30, up from $35.4 million in the comparable period in 2007. 

CFO George Pollock said Switch and Data is raising its revenue guidance for 2008 from $170 million to $171.5 million, and increasing its EBITDA  projection from $55 million to $56 million. It was the third time this year the company has increased its guidance. 

Switch and Data said it continues to execute on its strategic plan, and has already signed 25 sales contracts for its New Jersey data center, which opened its doors this month. The company’s monthly revenue per cabinet grew to $2,026, up from $1,816 in the same period last year, while its PAIX interconnection business also continues to grow, with a total of 20,879 cross connections, compared to 19,124 a year ago.  

Switch and Data CEO Keith Olsen said that the company has responded to the economic slowdown by consulting more closely with customers about future requirements. “We have not seen a slowdown that is impacting our growth or our funnel,” he said.

Switch and Data Opens NJ Data Center

Colocation and interconnection provider Switch and Data (SDXC) has opened the first phase of its new data center in North Bergen, New Jersey, which will be the company’s largest facility and key to its expansion in the New York market. The North Bergen data center previously housed disaster recovery specialist Sungard, and will add more than 163,000 gross square feet to Switch and Data’s New York area footprint.

The New Jersey facility is interconnected to Switch and Data’s existing Manhattan data centers at at 111 8th Avenue and 60 Hudson Street by a 10 Gigabit Ethernet connection, allowing customers to deploy equipment across multiple sites anf interconnect with customers in the other facilities. Switch and Data said it is already experiencing “high customer demand” for space, with Limelight Networks (LLNW), Intermedia and FXCM.com already signing up as customers in North Bergen.