The Tampa, Florida-based company provides services to internet-dependent businesses including telecommunications carriers, ISPs, online content providers, and enterprises. It claims the broadest network neutral footprint in North America, through 34 facilities in 23 markets.
S&D believes its network-neutral business model is a primary differentiating factor in the market, and said its customers are able to connect directly to their choice of telecommunications service providers in an open marketplace.
It has a blue-chip customer base with North America based carriers and ISPs including AboveNet Communications, AOL, and Qwest, and international carriers such as BT, ChungHwa Telecom, Singapore Telecommunications, Telecom Italia, and VSNL.
It also provides services to content providers including DirecTV, Electronic Arts, Google, LimeLight Networks, Yahoo!, and YouTube, while internet-dependent businesses using its services include Amazon.com, GlaxoSmithKline, Hewlett Packard, Microsoft, and VeriSign.
S&D sees growing demand for its services and said the Telecommunications Industry Association predicts that internet traffic in the US will grow at a 34.4% compound annual growth rate from 2005 to 2008. It said this growth is being driven by increasing broadband penetration and the proliferation of bandwidth-intensive services including VoIP, online gaming, streaming video and audio, and IPTV. It said this is leading to increasing demand for interconnection services, as network service providers, ISPs, and other internet-dependent businesses require additional connectivity to exchange increasing amounts of network traffic.
It said internet traffic growth is also leading to increased demand for co-location services that house networking and computing equipment such as switches, routers, fiber-optic transmission gear, and servers for businesses that need to connect with each other and the internet.
Fueled by five acquisitions, S&D’s revenue grew from $42.2m in 2002 to $91.4m in 2005. However, it recorded a net loss of $44.9m last year. In the first six months of 2006, it trimmed it loss from $15.2m to $12.4m on revenue that rose 4.4% to $54.2m.
S&D said it has 821 customers, operates 16,991 cross-connects, and estimates its utilization rates to be 66%.
When it comes to competitors, S&D said Equinix and Terremark offer services similar to its own. In addition, it is up against US-based carriers including AT&T and Level 3 which provide interconnection services through a single owned network. S&D said it also competes with managed service providers such as AboveNet, InterNAP, and Savvis, web hosting companies, and ISPs, and said NaviSite also provides co-location services as part of its offerings.
