Tuesday, January 26th, 2016

Time	Event
1:00p	As Internap Shares Plunge, is There an M&A Upside? Last year, Internap Corp. hired Morgan Stanley to “evaluate strategic alternatives,” but despite the move, the second half of 2015 was a painful one for its shareholders, and the situation hasn’t improved this year, which has so far brought a 38-percent plunge in value. This is happening with the backdrop of numerous analysts being bullish on data center stock in general. Internap shares have traded down over 55 percent during the last 12 months, with the share price decreasing 38 percent during the first three weeks of 2016 alone. During the past 52 weeks, INAP has traded in a range of $3.59 – $10.75 per share. Last week, its shares hit a new 52-week low of $3.59 per share, prior to the 4-percent bounce on Friday up to $3.93 per share. This has resulted in Internap sporting a market capitalization in the $220 million range. There is a number of players who may be willing and able to write a check that size, if they can look at the company from the glass-half-full perspective. But the recent global equities sell-off, spurred by China fears and the oil glut, may have potential suitors thinking twice about making acquisitions. Analyst: M&A Likely to Continue As reported by Benzinga in late November 2015, SunTrust Robinson Humphrey analyst Inder Singh initiated data center stock coverage with a positive view of the space, noting that data center traffic is expected to grow by a compound annual growth rate of 23 percent through 2019, when it will reach as much as 10.4 zettabytes per year, citing stats from the latest Cisco Cloud Index. Read more: Data Center Network Traffic Four Years From Now: 10 Key Figures Looking forward to 2016, “Singh suggested that M&A activity in the space will continue for two reasons: 1) wholesale and retail colocation companies are looking to expand their service offerings to become a ‘one-stop shop’ that can attract clients of all types and sizes, and 2) scale and size is important to attract enterprises that operate across many geographical regions.” Singh’s top data center stock picks included Equinix and CyrusOne. He initiated Internap with a Neutral rating and a $7.50 target price. Mr. Market – Why the Long Face? Internap operates in a fast-growing sector with remarkable cloud-driven tailwinds. Most Wall Street analysts are bullish about the prospects for the data center industry overall. Read more: JP Morgan: Data Center REIT Stocks Undervalued Since 2014, Internap has been transitioning its business to focus more on hybrid cloud services in addition to its legacy IP and colocation hosting business. Notably, during last year’s third quarter, the strategic partnership with Akamai Technologies to deliver cloud security solutions to Internaps’s high-performance customers was “…beginning to show results,” according to Internap’s earnings presentation. However, the company faces a lot of heavyweight competition: Amazon Web Services, Microsoft Azure, Google Cloud Platform, IBM SoftLayer, Equinix, Rackspace, Telx (now part of Digital Realty), CenturyLink, IBM Softlayer, AT&T, Verizon Communications, and Level 3 Communications, among others. These names have deeper pockets and operate at a much larger scale. Scale is a huge advantage when it comes to delivering better margins than Internap posted for the most recent quarter. INAP – Show Me the Money Source: INAP – Q3 2015 earnings presentation The Internap 3Q’15 earnings print included $2.2 million of positive levered cash flow. This was after reporting seven consecutive quarters with negative LCF, ranging from $20.3 million in 4Q’13 to $3.3 million in 2Q’15, as shown below. Source: INAP – Q3 2015 earnings presentation (click chart to enlarge) While it is always nice to see a positive number, a closer look at the financials shows that in order to post $2.2 million in 3Q’15, the capex was reduced by about $5 million from the previous two quarters. It remains to be seen if adjusted EBITDA growth for 4Q’15 will be offset by capex spending required to support the growth. Alternatively, the focus on core data services could allow Internap to continue to grow LCF with reduced capex moving forward. Glass Half-Full with Data Internap’s large installed customer base, its Managed Internet Routing Optimizer Controller, and other patented technology could lure potential suitors. SunTrust’s Singh highlighted the “proliferation” of bandwidth-intensive applications (including video streaming), which “increases the demand for distributed compute architectures to bring users closer to content.” “Given that two-thirds of internet traffic is data center-related, the importance of data centers both from a colocation and cloud perspective is significant,” Singh wrote. “Data center traffic is the biggest component of internet traffic, almost twice as much as the traffic that transverses IP WAN networks.” The Bottom Line Rangeley Capital’s Andrew Walker made a bullish case for purchasing INAP shares below $4.00 in a Seeking Alpha post last week. He noted the industry trend toward consolidation, Internap’s low margins as a stand-alone entity, and its relatively high balance-sheet leverage as rationale for the company being a logical M&A target. He did mention one significant fly in the ointment. There are larger shareholders with a cost basis in INAP shares above a likely buy-out offer, making them reluctant to sell their shares. Additionally, some investors believe that if the company was going to be acquired, it would have already happened. Potential suitors might include Comcast, strategic partner Akamai, and a host of other well-heeled industry stalwarts. Barring any earlier developments, Internap management has promised to update investors regarding strategic alternatives next month, when the company reports results for the quarter ended December 31, 2015. (Comment on this)
4:00p	The Importance of Balancing Data Center Power Consumption Jack Vonich is VP of Sales for Instor Solutions. How to effectively balance the power load in data centers is an issue that every data center manager is familiar with. When done correctly, a properly balanced data center helps to secure uptime and is often an important avenue for the facility to utilize extra power capacity. When improperly balanced, available power can become stranded, and the chance of damage to vital infrastructure increases. Taking the time to optimize power distribution when installing or refitting a data center is well worth the effort and is another crucial step toward maximizing its performance. To help avoid stranding power, we can look at the following example (power coming into data centers is measured as either X + Y + Z + Gr or X + Y + Z + Gr + N). In this simplified model (Fig. 1), we’re working with three-phase power which is broken into groups of two phases for each outlet powering the individual devises on the power strip. Fig. 1 If the devices are consistently plugged into the same group in each rack then one phase may be more heavily loaded compared to the two others (Fig. 2). Fig. 2 In this hypothetical scenario, if 100 devices (for our example let’s use server racks) were loaded this way and 1000Amps were the maximum phase load, there would be a significant amount of stranded capacity in the data center once Y hits the maximum load: 1000Amps = Y 800Amps = X 200Amps = Z An additional 100 racks could be added to the XZ phase groups to potentially balance the load more effectively, which would be a fast and tempting solution. However, even making this change would not produce an optimally balanced data center as it would result in: 1000Amps = Y 1000Amps = X 400Amps = Z While a step in the right direction, this configuration only utilizes approximately 500 kilowatts of power out of a maximum 600 kilowatts in the data center, stranding 100 kilowatts or 16 percent of available power. Clearly, improvements can be made. To properly distribute the power in our example, the load must be spread across all phases, providing the much needed balance that the previous configuration was lacking, resulting in an increase in available capacity (Fig. 3): Fig. 3 Now, if those same 100 server racks have the power distributed across the three-phase pairs, the load becomes more balanced and capacity is utilized much more effectively: 600Amps = Y 800Amps = X 600Amps = Z The extra benefit of this properly balanced power load is that an additional 250 devices can be added to the power strip: 50 on the XY group, 50 on the XZ group, and 150 devices on the ZY group. This results in: 50 devices added to XY 700Amps = Y 900Amps = X 600Amps = Z   50 devices added to XZ 700Amps = Y 1000Amps = X 700Amps = Z   150 devices added to YZ 1000Amps = Y 1000Amps = X 1000Amps = Z Most importantly, with the power load now optimally balanced, all of the available energy (600 kilowatts) is being used to run data center equipment. The problem of stranded power has been corrected and the maximum potential of the data center and its many pieces of equipment is realized. Even when a balanced power load has been achieved, it is important to remain vigilant as new changes to the data center are made. To help avoid future power balance issues, engineers need to understand the circuit capacities of their data centers and design rack power loads to fall within the de-rated power capacities. Whenever possible, they should also use outlet phase alternating power strips as well as rack power strips containing an LED display that provides readings on the power load (the latter allows staff to easily adjust into which phases each device is plugged). Finally, employing a basic DCIM tool to monitor loads and balancing with IP enabled power strips or Branch Circuit Monitoring can also be very helpful to discover power load issues as they are occurring. As with all technology, it pays to be proactive rather than reactive, and power load balancing in the data center is no exception. Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in our Knowledge Library. (Comment on this)
6:35p	Juniper Buys Data Center Interconnect Firm BTI Juniper Networks, one of the world’s largest telecommunications and data center networking vendors, has acquired BTI Systems, a Canadian company that specializes in optical data center interconnect and metro interconnect technology. Data center interconnect platforms are the backbone of today’s increasingly interconnected environments in multi-tenant data centers. Operators use them to connect enterprises to cloud service providers or network carriers or to interconnect various service providers who are partners. Things like cloud exchanges, where a data center customer can buy and deploy multiple cloud services from a list of providers through a single portal, are also enabled by data center interconnect platforms like BTI’s. Metro interconnects link multiple data centers in a metropolitan area, creating essentially a single virtual data center. Read more: Next-Gen Data Center Interconnect Tech Enables Explosion of Online Video and Cloud Services Juniper, based in Silicon Valley, plans to integrate Ottawa-based BTI’s solutions with its Software Defined Networking controller called NorthStar, Jonathan Davidson, executive VP and general manager for development and innovation at Juniper, wrote in a blog post. The SDN controller, powered by the vendor’s Junos OS, automates traffic optimization on Wide Area Networks. Terms of the transaction were not disclosed. According to Davison, they were “not considered to be material to [Juniper’s] financials,” Davidson wrote. BTI customers include data center service providers CyrusOne, Equinix, Interxion, and Rackspace, as well as the Russian social networking giant VKontakte. (Comment on this)
6:45p	Has the Linux Foundation Really Sold out to VMware? By The VAR Guy Has the Linux Foundation, the most powerful nonprofit organization in the open source world, sold out to corporate interests? And how committed is it to defending the GPL free software license? Those are questions some critics are asking in the wake of recent changes to the Linux Foundation’s by-laws. As former Red Hat (and current CoreOS) employee Matthew Garrett first noted, the Linux Foundation in mid-January modified its by-laws so that individual members of the organization can no longer participate in elections for the organization’s board of directors. Since the other members of the organization consist of corporations, this means people who are not associated with a big company can’t help decide who gets to run the Linux Foundation. In some ways, this change would seem relatively minor. It’s not as if the Linux Foundation is now only allowing corporations to join, or excluding non-corporate viewpoints entirely. But Garrett speculates that the change was made to prevent Karen Sandler, executive director of the Software Freedom Conservancy and a staunch supporter of software freedom, from succeeding in her recently announced election bid for the Linux Foundation board. Sandler’s organization is currently enmeshed in a legal battle against VMware over claims that the company violated the terms of the GPL, the license that governs the open source code of Linux and many other major open source projects. The Linux Foundation has issued relatively little public commentary on this issue. It’s still not clear whether the by-law change would prevent Sandler from running for the board, or just change the way other individual members of the Linux Foundation participate in board elections. And it’s not even certain that the timing of the change and Sandler’s candidacy announcement was more than coincidental — although the Linux Foundation has not denied as much. The by-law change was made Jan. 15 and Sandler announced her candidacy Jan. 17.) All the same, it seems unlikely that the Linux Foundation would risk so much face in the mere interest of providing a small, mostly symbolic help to VMware in its ongoing legal battle. The companies represented by the current board are hardly all in bed with VMware. The Foundation has much more to lose by seeming to be favoring corporations over the open source community writ large than it does by angering VMware, a company that deals mostly in closed-source software and has no singular influence over the Linux kernel. If the by-law change was related to Sandler, I suspect the Linux Foundation’s strategy is simply to avoid setting a precedent of making it easy for activists to assume a leading role in the organization. That move would still have implications for how the Foundation balances the interests of well-funded companies with those of community organizations like the one Sandler heads. But it wouldn’t be proof that the Linux Foundation is out to get the Software Freedom Conservancy for its campaign against VMware, or that it wants to protect VMware’s interests more than those of the open source community as a whole. This first ran at http://thevarguy.com/open-source-application-software-companies/has-linux-foundation-sold-out-vmware-probably-not (Comment on this)
7:18p	Oracle to Open Cloud Data Center in Abu Dhabi By Talkin’ Cloud Oracle announced on Tuesday that it is opening a new data center in the Middle East to keep up with growing demand for its cloud computing services. The Abu Dhabi data center announcement comes as Oracle also plans to open new offices in Abu Dhabi, Dubai Internet City, Amman, and Riyadh in 2016. According to Oracle, the company has more than doubled its workforce in the Middle East over the past three years. It plans to continue this by hiring more than 250 sales professionals in the region. Read more: Equinix Becomes Data Center Gateway to Oracle Cloud Oracle said that the data center will allow Oracle to better manage its service level objectives and data governance for customers throughout the Middle East. According to recent research by Gartner, the public cloud services market in the Middle East and Africa will be dominated by business process as a service (BPaas) cloud services making up 25.6 percent of the market, PaaS at 7.4 percent, cloud management and security services at 10.6 percent, IaaS at 10.7 percent, and 17.4 percent coming from cloud advertising. “As companies turn to cloud computing to modernize their business and drive innovation, we are seeing significant demand for Oracle Cloud – in the Middle East and around the world,” said Loic Le Guisquet, president, EMEA and APAC, Oracle. “We are investing in the infrastructure to support this demand by hiring new, top sales talent and by building new data centers. The Middle East is an important region for us and we will continue to invest here.” “We have doubled the size of our Oracle workforce in the United Arab Emirates over the past three years,” said Abdul Rahman Al Thehaiban, senior vice president, Oracle Middle East, Central Asia, North and South Africa. “This latest recruitment initiative will support the needs of rapidly growing businesses in the region that are embracing the agility and scalability that Oracle Cloud delivers.” This first ran at http://talkincloud.com/cloud-computing/oracle-open-abu-dhabi-data-center-meet-cloud-demand (Comment on this)
11:23p	dotCloud, PaaS Firm that Birthed Docker, Shutting Down By The WHIR Platform-as-a-Service provider dotCloud sent customers an email last week announcing their service would be closing due to the financial state of its parent company, cloudControl. “Due to the insolvency of our parent company, dotCloud will unfortunately have to be shut down on February 29, 2016,” wrote cloudControl founder and CEO Philipp Strube in a blog post. “To avoid service disruption or loss of data, it is required that you migrate your applications before that date.” Docker began as an open-source implementation of the deployment engine which powers dotCloud. In August 2014, Docker, Inc. sold dotCloud to Berlin-based cloudControl. Read more: cloudControl Moves All PaaS Clients from AWS to Google Cloud In October 2015, dotCloud announced it had moved all its applications over to Docker containers. Because dotCloud uses similar technologies to Heroku, Sturbe recommended customers migrate their applications to that platform. Meanwhile, Docker, which chose to pivot away from operating a PaaS, bought Unikernel Systems, a developer of software that reduces the footprint of operating systems earlier this month, helping ultimately make lighter-weight applications for microservice-based architectures. For dotCloud, it seems it’s the end of the road. This first ran at http://www.thewhir.com/web-hosting-news/dotcloud-the-paas-cloud-provider-that-birthed-docker-sets-closing-date (Comment on this)

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