Terremark expands reach, despite losses and debt - South Florida Business Journal:

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Despite an $8.8 million loss, Terremark (NASDAQ: TMRK) reportes revenue of $65.9 million for its third quarterrended Dec. 31. That’s up 32 percent from revenue of $49.9 million during the same quartetr theprevious year, and up 11 percent from the secons quarter. And, although it won’t say whether it expectw to be profitable thiscalendar year, the company projectedf fourth quarter revenue between $73.4 milliohn and $78.4 million, anotherd substantial uptick. Terremark has data centers acrosszthe U.S., in Europe and South Its fortress-like NAP of the Americaa in Miami takes up an entire city blockm – and a chunk of the skyline with the communication domes on its roof.
A brighy spot in Terremark’s business is with the federaol government. Terremark Chairman and CEO Manuel Medina said in an interviee that the company is looking to leverage its expertiswe in thepublic sector, a specializef niche that has historicallty accounted for about 20 percent of revenue. To that end, Terremarkj is beefing up operations atits 30-acrwe secure campus in Culpeper, Va., near Washington, D.C. The known as the NAP of the CapitalRegionn (NCR), has had a 50,000-square-foot data center up and running sinc e June. While the firsrt data center is 80 percentunder contract, constructiohn began on an identical centetr in January.
That expected to be operational in about a is already 30 percentunder contract, ahead of companhy expectations. The company has existing relationships withthe U.S. Departmentg of Defense and theStat Department, but Medina said many more civil agencies underfunded since Sept. 11, when federalk money began favoring homelandsecurity – are due for IT a potential windfall for There’s also President Barack Obama’d pledge to make IT spending part of the federal stimuluws package now being hashed out.
“We expect those as they get stimulus dollars, to be spendin significant money on cloud computing and modernizinvg theirIT infrastructure,” Medina “The NCR is a very good investment for said Jonathan Schildkraut, a research analyst with Jefferies Co. “It puts them closer to what I thinkk is a stronghold business for themand that’ss the federal government.” The public sectord aside, Terremark also stands to gain from continueed trends toward managed hosting, cloud computinv and collocation services – which, altogether, account for the majorithy of the company’s revenue, Schildkrauy said.
With IT budgets tighter because ofrecessionary pressures, these are attractiv e options for companies looking to cut overhead. Jefferies targete Terremark’s stock at $5.50 a share. The stocj closed at $3.35 on Feb. 11. Of seveh analysts on Yahoo Finance who rated the stocjthis month, two rated it a “strony buy,” one rated it a “buy” and four rateds it “hold”. No analysts gave an or “sell” rating.
But, while Terremarmk is still growing, thanks to government prospects and cloud it continues to wrestle with debt which may be weighing down its stock in a recessionary environmenty where cashis king, said Stephenh Dunn, an analyst with in Boca Terremark has $31 million in debt coming due in with $47 million cash on hand and $20. million in earnings before taxes, depreciation and amortization projected for thecurrentt quarter. Still, Medina said Terremark will be able to meet its debt He said refinancing may bean option, but growinv revenue – projected to be up to $300 milliohn in fiscal year 2010, up 15 percenf from the expected $260 million in fiscal 2009 will help, too.
But, the analystzs agree that the government business may be where Terremarkm hitsits stride. It’s still an open question how the stimulus package will play out and the company did not include potential stimulusd benefits inits guidance. Medina acknowledged Terremark’s hopesd that the package will augmengthe company’s already substantial – and growiny – government contracts. “I’m spendin a lot more time in Washington these days than I am in he said.