Equinix Inc. (EQIX) dropped more than 30 percent to $72.60 on Wednesday morning after the company reduced its revenue outlook for the third quarter, prompting at least three brokerage firms — Oppenheimer, Citi (C), and Wells Fargo (WFC) — to downgrade the stock. The operator of Internet data centers attributed the revenue dip to higher churn and discounted pricing on some large deals, saying it now expects third-quarter sales to be in the range of $328 to $330 million, about 2.2 percent lower that its previous outlook, and total revenues for the full year to be approximately $1,215 billion, about 1.2% lower. Analysts, on average, have expected the company to report $336.8 million in revenue in the third quarter, and $1.23 billion in revenue for the year, according to Thomson Reuters (TRI).
The company said the new guidance is due to “underestimated churn assumptions in Equinix’s forecast models in North America, greater than expected discounting to secure longer term contract renewals and lower than expected revenues attributable to the Switch and Data business acquired in April 2010.”
Shares of Foster City, Calif.-based Equinix, which prompted a sharp sell off of the entire data center sector this morning, fell 31 percent, or $32.50, to a 52wk low of $72.04, to be the lop loser on Nasdaq composite trading. About 14 million shares changed hands as of 11:38 am ET.