Cloud Computing: Four Lightning Bolts From the Sector
Submitted by: Bidness Etc
2013-11-12 00:01:25
As the cloud computing industry gains traction, Bidness Etc takes a look at four stocks best positioned to capitalize on the opportunities created
(OPENPRESS) (OPENPRESS) Cloud computing is a game-changer, affecting the entire value chain. The industry involves players offering services like data centers, software as a service (SaaS) and networking equipment. Every player in this industry is trying to integrate its offerings and cater to the requirements of cloud and data centers. Still an evolving industry, competition is expected to intensify and data centers will be the epicenter. We believe the companies best positioned to take advantage of the opportunities offered by this industry include Equinix (EQIX), Interxion (INXN), Salesforce.com (CRM) and Cisco (CSCO).
Industry Review
Cloud computing has revolutionized how the IT industry deals with the addition, manipulation, retrieval and submission of data. The transformation has, to some extent, affected every player in the IT ecosystem, while paving the way for several new pure play companies in the cloud computing industry.
Major industry players are categorized based on where their services fit in in the value chain. Players may be from diverse segments within the industry, such as data centers, telecom, IT services, and hardware, etc. The largest cloud service providers include Amazon (AMZN), Salesforce.com Inc (CRM), Rackspace Inc. (RAX), Google Inc. (GOOG), Microsoft Corporation (MSFT) and VMWare, Inc. (VMW).
Cloud computing has impacted the service structure of telecom companies, data centers, IT services providers, data networking hardware manufacturers, and software providers. In this report, Bidness Etc's primary focus is on data centers, Software as a Service (providers and manufacturers of networking equipment).
Data centers provide the infrastructure and/or physical space for computing, storage, networking devices, power supplies, etc. Following rapid growth in cloud computing, data centers are strategically well-positioned to capitalize on the new opportunities created in the industry. Data centers also provide management services to cloud service providers, which mean greater room for growth. The data center segment is dominated by a few major players, among which Equinix, Inc. (EQIX) and Interxion (INXN) are the most prominent.
Exxon Mobil Corporation (XOM) more than made up for the disappointing results in the previous quarter when it beat estimates and announced $112.4 billion in revenues for 3QFY13. This was a significant turnaround for the company which had recently announced its worst ever results since 2010.
Earnings from its Upstream segment noticeably improved on both a year-over-year (YoY) and quarter-over-quarter (QoQ) basis. The segment performed better because global oil pricing benchmarks like the price of Brent crude oil increased during 3QFY12. Exxon is also increasing its exposure in liquid production to capitalize on high crude oil prices and upstream volumes also increased 1.5% YoY.
The decline in refining and marketing margins is a cause for concern and hit earnings but the possible impact was partially offset by an increase in volumes in 3QFY13. The Dartmouth refinery, which is being converted into a marine terminal, remained functional over the quarter, which also contributed to the higher refining volumes.
Exxon's Chemicals business was the highest growing segment in the previous year. Margins as well as volumes have improved compared to the previous quarter and the previous year's same quarter.
Management also stated that in its earnings call that capex for FY13 was in accordance with guidance. The company's cash balance over the quarter rose by $700 million to $5.7 billion. This indicates Exxon's ability to keep on paying dividends and also continue its share buyback program. Dividend paid out by Exxon this quarter was $2.8 billion and the company also bought back 34 million shares worth $3 billion.
