UPDATED: Data Center Stocks Rise 20.3% in the 3rd Quarter

By David Gross

Data center stocks were up 20.3% this quarter, well ahead of the 12.3% gain posted by NASDAQ, and 10.7% gain posted by the S&P 500.

Leading the way was Savvis, with a 43% gain, while 7 of the 13 companies we track in the services sector were up over 20%.   Akamai bounced back strongly after a weak earnings call dropped into the 30s briefly, while the REITs have been held back a little as their dividend yields are under 4%.   While I continue to believe that Wall Street is overestimating the threat to Akamai from smaller competitors and Level 3, Limelight and Internap also posted strong gains during the quarter.

Equinix came back from its 2Q price decline, while reporting 21% year-over-year revenue growth excluding Switch & Data.  Competitor Telx filed an additional S-1 in the quarter, but still no news on when it will actually IPO.

Rackspace, continues to do very well operationally and financially, although it is now trading at over 60x annualized earnings with just 20% top-line growth.   Nonetheless, it continues to outperform its peers with a 1.6 Revenue/PP&E ratio, a benefit of staying completely out of the co-lo business.  Service focus is also helping AboveNet grow, with top line expansion in the mid-teens, and the data center-focused fiber provider is on the verge of surpassing the market cap of over-diversified Level 3, whose revenue has been mostly flat over the last 12 months.

		DataCenterStocks.com Services Index
Company	Ticker	Mkt Cap	Sep 30 Close	July 1 Open	Gain %
Equinix	EQIX	$4,666,136,500	102.35	81.22	26.02%
Digital Realty	DLR	$5,386,410,000	61.70	57.68	6.97%
DuPont Fabros	DFT	$1,489,634,500	25.15	24.56	2.40%
Rackspace	RAX	$3,246,720,600	25.98	18.34	41.66%
Savvis	SVVS	$1,164,459,200	21.08	14.75	42.92%
Level 3	LVLT	$1,555,420,000	0.94	1.09	-14.04%
Akamai	AKAM	$9,113,189,800	50.18	40.57	23.69%
Navisite	NAVI	$125,851,200	3.34	2.63	27.00%
Terremark	TMRK	$679,441,400	10.34	7.81	32.39%
Limelight	LLNW	$579,340,400	5.89	4.39	34.17%
AboveNet	ABVT	$1,311,105,300	52.09	47.18	10.41%
CoreSite	COR	$280,432,900	16.39	16.00	2.44%
Internap	INAP	$254,359,000	4.90	4.17	17.51%
Total		$29,852,500,800			20.29%

	Sep 30 Close	Jul 1 Open	Gain
NASDAQ	2368.62	2109.24	12.30%
S&P 500	1141.20	1030.71	10.72%

Note : CoreSite traded for six sessions in the quarter, and has been weighted accordingly

We weighted each stock's gain by end-of-the-quarter market cap.

Our market-weighted DataCenterStocks.com Services Index launches tomorrow at the opening bell with an index value of 100.