Momentum for DCML

The list of industry members embracing the Data Center Markup Language (DCML) standard continues to grow, with BMC Software and Fujitsu Siemens Computers joining the effort to create an industrywide standard for reducing the cost of operating corporate data centers. The DCML Organization now has 37 members, with prominent backers including EDS, Opsware and Inflow.

Thus far, major systems makers such as IBM, Hewlett-Packard, Sun Microsystems and Dell have not joined the organization. And Microsoft, which has proposed its own Extensible Markup Language (XML)-based alternative to DCML, called System Definition Model, is not a member.

More Money for Equinix

Thanksgiving is here, but the folks at Equinix could be forgiven for wondering if Christmas came early. On Friday, the Internet exchange operator raised $105 million by selling 5.5 million shares of common stock, with strong demand leading the company to issue 2 million shares more than initially planned. The Equinix sale, along with a $6.9 million initial public offering Nov. 10 by Access Integrated Technologies, marked the first public stock sales by American hosting specialists since Loudcloud's IPO in March 2001.

Concerns that the additional shares would dilute the company's stock price also proved unfounded. The new shares were priced at $20, and Equinix stock closed Friday at $22.35, and had risen further to $25.48 by yesterday's close. The Foster City, Calif. company's stock was at $3.39 a share on May 1.

In the past month Equinix has announced an expansion into a huge former Sprint data center in Silicon Valley, an expansion of hosting services it provides to Yahoo!, an agreement to host the Britannica.com web site, and an eight-site deployment by AboveNet. But a key element in the financial sector's enthusiasm for Equinix is the company's momentum selling to Wall Street itself. Last week the company launched the Equinix Financial Exchange, a service offering interconnections to accelerate electronic trading operations, several of which are hosted in its Chicago data center.

C&W: No Sale This Year

Cable & Wireless chief executive officer Francisco Caio said today that the company will not complete the exit of its US hosting business this year. "Our deadline is the end of the next year," said Caio. "We would like to do it before then of course, but I don't think it will be in December."

One group that isn't sitting around waiting for a deal is the Cable & Wireless salesforce. The company says it signed up 450 new clients in the third quarter in the midst of rumors about the unit's future. According to C&W, the orders represent over $32 million in new revenue.

How Far? (Continued)

A new survey of business continuity executives suggests that one in five enterprise companies is considering putting more distance between their primary and backup data centers. The survey by the British web portal Continuity Central of more than 150 IT execs found that 62 percent of US companies had formal policies on the distance between their data centers, with the minimum ranging from 5 miles to 300 miles. The number for British companies was slightly lower at 52 percent.

"The policies of US companies were generally based upon much longer distances between primary and recovery facilties than UK ones, mainly due to the US's higher probability of extreme environmental disasters," the survey noted.

Significantly, 21.3 percent of respondents said they planned to move their secondary disaster recovery facilities further away from their primary site. Another 4.9 percent said they wanted to move their secondary site closer to the primary site, while 11.5 percent said they wanted to move away from using third-party suppliers and develop a company-owned recovery facility.

Such reader surveys can sometimes yield diverse results. But the numbers suggest that as many as a third of companies participating in the survey were considering some type of change in their data center facilities. Anecdotal evidence suggests that there's been a marked pickup in activity among corporate users investigating data center space. That facility shopping isn't always generating quick deals. But if the Continuity Central survey results reflect corporate intentions, there's plenty of data center deals out there yet.


Read the full survey in PDF format.

Buffett Bails on Level 3

It was considered a good sign for telecom when Warren Buffett decided to invest big in Level 3. What does it say when he sells? Buffett's Berkshire Hathaway Investments has apparently sold the vast majority of its position, according to an SEC filing Wednesday night that reported a 1.6 million-share stake in Level 3, down from close to 20 million shares as recently as June 30. Has Buffett decided its a good time to get out of telecom? Or is the stock sale based on the performance of Level 3, rather than a sector-based analysis?

The company's shares were trading at about $2.75 when Buffett bought his Level 3 position last summer, and are valued at about $5.25 in early trading this morning. That's about a 90 percent gain in 16 months, which is not bad at all.

It's interesting timing, since Level 3 chairman Jim Crowe said last month that the company is eager to acquire distressed telecom assets. More than few industry observers expected that the investment by Berkshire and its partners would allow Level 3 to go shopping for cheap telecom assets. Instead, the company's investments have focused on software, with the notable exception being the purchase of Genuity's assets. Level 3 is regularly mentioned as a possible buyer for Cable & Wireless' US assets. Rumors of a prepackaged Chapter 11 filing by C&W's US unit are probably feeding speculation, since Level 3 structured the Genuity deal as a prepackaged bankruptcy. Stay tuned.

Landlord Headache Alert

Chatter about the fate of Cable & Wireless' US operation continues, with the Financial Times reporting over the weekend that the company is working on a prepackaged bankruptcy and sale. This approach would dramatically reduce the cost of exiting US leases, making the ongoing business much more attractive to potential acquirers.

As always, once the rumor mill gets going it's hard to know what to believe. A report last week that the US unit would file Chapter 11 Friday evening proved to be untrue (see update here ), while other weekend coverage highlighted the rumored collapse of talks with one suitor.

While a prepackaged Chapter 11 filing might help Cable & Wireless solve its problems, it would be a huge headache for the company's landlords, as a bankruptcy would allow the company to reject leases on surplus properties. Given current interest in high-quality data centers from Wall Street and the enterprise sector, some of the surplus sites that aren't acquired could be sold off piecemeal through the bankruptcy process.

Stand-alone data centers would be particularly attractive on the resale market - but the most marketable centers might well end up being among those included in any bundled sale. Cable & Wireless' US operations include a 230,000 square foot Internet Solutions center in Reston, Va. and a 200,000 square foot presence in Weehawken, NJ.