Dell Building Data Center Container
Dell Inc. (DELL) is building a data center in a shipping container for a customer, and will follow with a container product line. "We have (a container system) in the works for a customer," a Dell insider told The Register. "We are looking at that space very, very closely." The Register's Ashlee Vance said it appears Dell has "geared up a container for Microsoft's late April RFP."
The "data center in a box" concept has been embraced by Microsoft, which plans to pack between 150 and 220 40-foot containers into the first floor of its new Chicago data center. Microsoft executives say the new facility will house up to 300,000 servers.
Dell joins a growing herd of hardware vendors offering container solutions, including Sun Microsystems (JAVA), Rackable (RACK) and Verari Systems all report strong interest in their container products. Last month IBM said its new iDataPlex series of cloud computing servers is being offered in a 40-foot trailer, marking IBM's first foray into container-based systems.
Posted by Rich Miller 
May 09, 2008 | Permalink | Newsletter
April 25, 2008
Rackspace Confirms $400 Million IPO
Managed hosting specialist Rackspace, Inc. confirmed late Friday that it has filed forms with the SEC for an initial public offering (IPO). The shares will be sold through a "dutch auction" process similar to that used by Google in its 2004 IPO.
The company said the number of shares to be offered and the price range for the offering haven't been determined, but Reuters placed the offering's potential value at $400 million. Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC and Merrill Lynch & Co. will act as joint book-running managers of the offering. Rackspace intends to trade under the symbol RAX on the New York Stock Exchange.
The shares will be sold through a "dutch auction" process similar to that used by Google in its 2004 IPO. "We believe allowing open participation in this offering through a technology-enabled auction process aligns with our corporate culture and business mission," the company said in its SEC filing. Information about the auction will be posted at RackspaceIPO.com
Rackspace said it had revenue of $362 million and net income of $17.8 million in 2007, and ended the year with 29,000 customers and 36,000 servers. The San Antonio, Texas managed hosting company filed to go public in March 2000, only to see the dot-com bubble burst a few months later. Rackspace withdrew its IPO plans in March 2001. Rackspace has raised $39.6 million in equity capital.
The company nearly tripled its employment in two years, growing from 730 to 2,021 employees. The company is in the process of a $100 million renovation of a former shopping mall to serve as its headquarters and data center.
Posted by Rich Miller April 25, 2008 | Permalink | Newsletter
Rackspace IPO Announcement Near?
Is Rackspace finally ready to announce an initial public offering? That's the speculation over at TechCrunch, where Erick Schonfeld notes that "there are no filings yet with the SEC, but press releases touting its revenues have mysteriously been stripped from the company’s site." In the comments, Mike Arrington adds that the removal of financial releases from the web site is a "huge sign that they're prepared to file an IPO."
Rackspace is often the focus of IPO speculation because it filed to go public in March 2000, only to see the dot-com bubble burst a few months later. Rackspace withdrew its IPO plans in March 2001.
A closer look shows that there actually is a recent SEC filing, but it doesn't tell us much. On March 17, Rackspace filed a REGDEX form, which is used by companies for stock sales that are exempt from SEC registration requirements under Regulation D, which typically covers private stock sales to a limited number of investors. Rackspace's REGDEX form was submitted via a paper filing, so no electronic text is available (this is apparently not unusual for REGDEX forms). A full explanation of Regulation D exemptions is available from the SEC web site.
Posted by Rich Miller April 25, 2008 | Permalink | Newsletter
April 16, 2008
Intel Results Boost Data Center Stocks
An upbeat earnings report and forecast from Intel (INTC) gave a lift to the technology sector in trading on Wall Street today, with data center specialists having a particularly strong session, gaining between 5 and 10 percent on the day. Here's a recap of the gainers in the sector:
- Switch and Data (SDXC) added 92 cents a share to $10.92, and improvement of 9.2 percent.
- Terremark (TMRK) rose 49 cents a share to $6.13, an improvement of 8.7 percent.
- Navisite (NAVI) improved by 23 cents per share to close at $3.28, an increase of 7.5 percent on the day.
- Shares of Savvis (SVVS) gained 7.1 percent, rising $1.13 to $16.99 a share.
- Digital Realty Trust (DLR) moved $2.02 higher to $38.79, up 5.5 percent.
- Equinix (EQIX) improved by $3.76 per share to close at $73.65, up 5.4 percent on the session.
- Level 3 (LVLT) added 10 cents a share to $2.13, an improvement of 4.9 percent.
Tech shares are likely to get a further boost from IBM's earnings report after the market close. Big Blue (IBM) said its first quarter net income rose 26 percent to $2.32 billion, exceeding analysts' expectations.
Posted by Rich Miller April 16, 2008 | Permalink | Newsletter
April 10, 2008
Hosted Solutions Discusses Sale to ABRY
Hosted Solutions CEO Rich Lee says his company's $140 million acquisition by ABRY Partners will allow it to expand into new markets and new services. "We've grown in a controlled, strategic manner," Lee says. "We've doubled our revenue each year." Which is why private equity firms are buying regional data center players. This video runs about 6 minutes.
For additional background and details, see our story about ABRY's acquisition of Hosted Solutions, as well as the recent expansion of ABRY portfolio company CyrusOne, which has added a Dallas data center.
Posted by Rich Miller April 10, 2008 | Permalink | Newsletter
Idaho Loses $250 Million Oracle Data Center
The state of Idaho has apparently lost out on a $250 million data center project for Oracle Corp. (ORCL), according to local media, who report that the giant software maker walked away when the property owner sought to raise their price as the deal was closing. Oracle has reportedly shifted its site location efforts to the Salt Lake City area.
The Idaho Business Review says plans for Oracle to build the data center in Meridian, Idaho, fell apart when the property owner raised the price of the site from $4.85 per square foot to $7 a square foot, an increase of 44 percent. The facility would have created 150 jobs paying an average of $65,000 a year.
Posted by Rich Miller April 10, 2008 | Permalink | Newsletter
Video: Rackspace Converts Mall into Data Center
Today's video provides a glimpse inside the unsuual new headquarters for Rackspace: a 1 million square foot former shopping mall in San Antonio. Robert Scoble of FastCompany.tv gets a tour from chairman Graham Weston and founder and Chief Technology Evangelist Dirk Elmendorf. The wide-ranging discussion covers the history of the facility, the reasons why San Antonio is a hot data center market, and the changing nature of the hosting business. This video runs 38 minutes.
For additional information, see our initial story about the Rackspace expansion and our coverage of the San Antonio data center market.
Posted by Rich Miller April 10, 2008 | Permalink | Newsletter
March 24, 2008
Bargain Hunting in Data Center Stocks?
The last couple of months have been brutal for the share prices of public companies in the data center industry. Sentiment may have turned today, as a number of battered data center stocks scored double-digit gains. Here's a recap of the gainers in the sector:
- Shares of Savvis (SVVS) gained 14.5 percent, rising $2.22 to $17.51 a share.
- Level 3 (LVLT) added 24 cents a share to $2.10, and improvement of 12.9 percent.
- Equinix (EQIX) improved by $6.86 per share to close at $64.64, up 11.9 percent on the day.
- CDN specialist Limelight Networks (LLNW) was up 10.4 percent on the session, rising 34 cents to $3.60.
- Switch and Data (SDXC) gained 83 cents a share to $9.67, up 9.4 percent.
- Akamai (AKAM) shares were 7.5 percent higher, moving up $2.28 to $32.87.
Next week we'll look at the first quarter performance of data center companies, and it won't be pretty. But today's session suggests that some investors believe data center stocks are attractive at these prices.
Posted by Rich Miller March 24, 2008 | Permalink | Newsletter
March 17, 2008
How Much Are Bear's Data Centers Worth?
In a stunning case of reverse sticker shock, Bear Stearns has been sold to J.P. Morgan for $270 million, or just $2 a share. Bear's stock (BSC) had closed at $30 Friday and $57 Thursday. Shortly after the announcement, the Federal Reserve cut its discount rate by a quarter-point to 3.25 percent, and Wall Street braced for a difficult Monday.
The sale price shows little confidence in the value of Bear Stearns' financial assets. Paul Kedrosky noted Saturday that "the value of Bear’s head office in a prime location on Madison Avenue, near JPMorgan’s offices, may account for a big portion of the eventual sale price."
And what about its data centers? Bear Stearns has facilities in Whippany, New Jersey and MetroTech Center in Brooklyn, as well as a two-story network operations center (NOC) within its New York headquarters.
Posted by Rich Miller March 17, 2008 | Permalink | Newsletter
March 16, 2008
Cogent Unplugs Telia in Peering Dispute
Cogent Communications (CCOI) has discontinued a traffic-swapping agreement with Telia, a major European broadband network. The dispute makes it harder for customers using one network to connect to web sites hosted on the other. These arrangements, known as peering, rarely attract wide attention. When they do, it usually involves Cogent, which is known primarily for its cheap bandwidth and has previously been involved in peering disputes with Limelight Networks (LLNW) in 2007, Level 3 (LVLT) and France Telecom in 2005 and AOL in 2002.
Peering allows providers to exchange traffic with one another at no cost (or low cost) by establishing direct connections between their networks, instead of routing traffic across the public Internet. Peering is often free as long as the amount of traffic exchanged is not out of balance, providing substantial cost savings for bandwidth for high-traffic sites and networks.
Posted by Rich Miller March 16, 2008 | Permalink | Newsletter
March 14, 2008
Fed, J.P. Morgan Rescue Bear Stearns
In a dramatic move, the Federal Reserve Bank of New York and J. P. Morgan Chase have provided emergency funding to avert a financial collapse of Bear Stearns Cos. The development marked a more serious turn in the credit crunch in the U.S. markets, and the speed with which the largest financial firms can be imperiled by a crisis of confidence.
"Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity," said Alan Schwartz, president and chief executive in Bear Stearns, in a written statement. "We have tried to confront and dispel these rumors and parse fact from fiction. Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."
J.P. Morgan said it is "working closely with Bear Stearns on securing permanent financing or other alternatives for the company." It's not immediately clear whether this might include Morgan acquiring assets of Bear Stearns or even the entire company.
Posted by Rich Miller March 14, 2008 | Permalink | Newsletter
March 06, 2008
Validus Sees Gains for DC Hybrid Systems
Validus DC Systems says it is starting to see traction for its DC power infrastructure products for data centers, and counts a major bank and a private data center developer among its new clients. Rudy Kraus, the CEO and founder of Validus, says the trend towards high-density computing is convincing more data center operators to consider DC power distribution.
"We actually just sold a system to one of the major banks," Kraus said Tuesday at the DataCenterDynamics New York conference at the New York Hilton. Kraus said early customers are choosing hybrid approaches in which Validus systems operate with existing AC equipment, offering customers an "on ramp" to DC power distribution. Validus recently signed a reseller agreement with GE Digital Energy that Kraus said will accelerate adoption of his company's hybrid products.
Validus was founded in 2002 as a spinoff from equipment vendor DSA/Encore, and has developed an end-to-end DC system using a -575V DC power distribution system and patented power converter unit to provide -48V DC at the point of use. The company says its approach can improve energy efficiency by 40 percent compared to existing AC systems. In December the company raised $10 million in a first round of venture funding led by Oak Hill Venture Partners.
Posted by Rich Miller March 06, 2008 | Permalink | Newsletter
February 04, 2008
The Economics of Go Daddy's Super Bowl Ad
Domain registrar and web host Go Daddy paid $2.7 million for its Super Bowl ad, which steered people to the GoDaddy.com web site to view a humorous video featuring Danica Patrick - and maybe even buy a domain or web hosting plan, too. Go Daddy CEO Bob Parsons says the ad generated 1.5 million visits to the GoDaddy.com web site. The company bought only one ad, unlike past years when it has purchased up to three spots. Did the investment pay off for Go Daddy?
Let's compare the Super Bowl ad with other popular customer acquisition channels in the domain and hosting business. Two popular methods are pay per click (PPC) ads placed on search engines, and cost per action (CPA) campaigns using affiliate networks.
The cost per click for the term "domain name" in a Google AdWords pay per click advertising campaign is about $8, according to Google's external keyword tool for AdWords. That means you could buy about 337,500 clicks for $2.7 million - well below the 1.5 million visitors generated by the Super Bowl ad, which works out to about $1.80 per visitor.
Posted by Rich Miller February 04, 2008 | Permalink | Newsletter
ALL STORIES FROM THIS CATEGORY:
- Dell Building Data Center Container
- Rackspace Confirms $400 Million IPO
- Rackspace IPO Announcement Near?
- Intel Results Boost Data Center Stocks
- Hosted Solutions Discusses Sale to ABRY
- Idaho Loses $250 Million Oracle Data Center
- Video: Rackspace Converts Mall into Data Center
- Bargain Hunting in Data Center Stocks?
- How Much Are Bear's Data Centers Worth?
- Cogent Unplugs Telia in Peering Dispute
- Fed, J.P. Morgan Rescue Bear Stearns
- Validus Sees Gains for DC Hybrid Systems
- The Economics of Go Daddy's Super Bowl Ad
- Brutal January for Data Center Stocks
- Links: Terremark, The Planet, Telx
- Links: Validus, Switch & Data, Go Daddy
- Hosted Solutions Adds Charlotte Data Center
- Funding for CacheLogic, Automattic
- Friday Linkapalooza: Google Sites, NYSE
- Managed Data Continues Building
- Growing Interest in Data Center News
- Roundup: Peak 10, Hosted Solutions, APC
- Rough Start to 2008 for Data Center Stocks
- Private Equity Buyout for Data393
- Mixed Year for Data Center Stocks in 2007
- Navisite Shares Plunge 28 Percent
- Intuit Buys Homestead for $170 Million
- Report: Dataside in Acquisition Talks
- Report: Deutsche Telekom Eyes EDS Bid
- AT&T Opens Data Centers in NJ, Toronto
- Levanta Gets $8M for Data Center Automation
- Major Qwest Contract with i/o Data Centers
- Mixed 3Q Results for Data Center Stocks
- VeriSign Expands in Five U.S. Markets
- GNi, Hosted Solutions Named to Inc. List
- Dell Strategy: Small Deals, Not Big Ones
- Meckler Sees Anxiety Selling in Startups
- Data Center Stocks Still Beating Dow
- Powerset Releases Data Center Tool
- BladeLogic IPO Priced at $17 a Share
- Strong First Half for Data Center Stocks
- VeriSign CEO Departs
- Evergrid gets $10M in VC Funding
- Data Center Consolidation Ahead for Intel
- Citigroup Moves HPC to Grid, Cuts Jobs
- Cervalis Gets $20M Expansion Financing
- Rackable Selling Portable Data Center
- Startup FastScale Raises $6.5M
- FiberNet Expands at 60 Hudson
- Data Center Startup Rohati Raises $11M
- Data Center Builders Weather Downturn