Welcome and thank you for standing by. At this time all participants are in a listen only mode until the question answer session. (Operator Instructions) Today’s conference is being recorded, if you have any objections you may disconnect at this time. I would now like to turn the call over to Mr. Jason Star. Thank you sir, you may begin.

Welcome to our Q3 2008 conference call. Before we get started I would like to remind everyone that some of the statements that we are making today are forward-looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements and may be affected by those risks we identified in today’s press release and those identified in our filings with the SEC including our Form 10K filed on February 27, 2008 and Form 10Q filed on August 5, 2008. Equinix assumes no obligations and does not intend to update forward-looking statements made on this call. In addition, we will provide non-GAAP measures on today’s conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why the company uses these measures in today’s press release on the Equinix Investor Relations page at www.Equinix.com. We would also like to remind you that we post important information about the company on the investor relations page of our website. We encourage you to check our website regularly for the most current, available information. With us today are Steve Smith, Equinix’s Chief Executive Officer and President, Keith Taylor, Equinix’s Chief Financial Officer and Peter Van Camp, Equinix’s Executive Chair. At this time I will turn this call over to Steve.

It is good to have everyone on the call today and I am looking forward to discussing another great quarter for Equinix as well as our initial view into 2009. Also great to have you here as well PVC, considering your history and continued involvement. I thought this would be a good call to have you sit in on with us. To get started let me begin by acknowledging these uncertain, challenging times for our global economy. Of course, every year on our 3rd Quarter earnings calls we provide an outline of expectations for the year to come and the state of the economy has been in the forefront of our minds as we develop our ’09 operating plan an approach to next year. That said I am pleased to be reporting another great quarter today as we continue to see strong demand across all three regions with another great booking result and a robust pipeline. Other leading indicators such as pricing, churn, receivables and customer satisfaction continue to point in the right direction. As we talk to customers about their own planning for 2009, responses range from a strong view that they will need to continue to grow with us to some level of uncertainty in their budget process as next year unfolds. In all cases it is very clear that our services are not considered to be discretionary spending but are actually essential to their operations. On today’s call I plan to spend more time on the fundamentals of our business, our expectations for continued growth and how well positioned Equinix finds itself to continue to drive its market leadership. So before I get to that let me provide a quick summary of our quarterly results and then turn it over to Keith for deeper insights into the…

I am pleased to provide you with our third quarter financial results and take this opportunity to give you some additional perspective on the quarter’s performance both against our expectations and assess the impact of currency on our results. Right now I will give you some color on the key trends we look forward to Q4 2009. Before I go into the substance of my comments I do want to highlight a few key points related to foreign currency. First off, as you are all probably aware there has been extreme volatile informed currencies over the past few months. As an example, just in the last 24 hours both the Euro and Pound Sterling depreciated significantly against the US dollar. We have attempted to reflect this weakness in our guidance but recognize we are in a period of flux. Going forward as currencies move in either direction this will be reflected in our reported results from revenues to EBITDA and then on the balance sheet. It is important to note that our lowest margin business is in Europe and the bottom line impact from currency fluctuations is less significant than if the revenues were affected in the US or AP region. Second, we do not hedge revenues, but have hedged about $50 million of notional value against remeasurement exposure related to our assets or liabilities. Thirdly, our 2008 non-US capital investments are being predominantly funded through local currency borrowing line in Asia and Europe. This is good when the dollar was weakening. 2009 non-US capital investments will be predominantly funded from the US. This is good when the dollar is strengthening. With that let me get into the substance of my comments for the quarter first starting with the revenue. Our Q3 revenues grew 7% over the prior quarter to…

Now, let’s turn our attention to 2009. As I mentioned at the beginning of the call I think it’s important to reiterate that our business momentum remains very strong. Over the past several weeks many of you have asked how we intend to operate in this current market environment. I want to be very clear that we realize now more than ever, this is the time to keep executing. We will also of course, continue to be very prudent and measured, yet still remain opportunistic in how we do this. We believe we’ve built a strong plan for 2009 including the flexibility to accelerate or potentially even moderate our business growth as conditions warrant which could be very important this coming year. Within the 2009 plan we have also developed an expansion framework which places and even greater focus on prioritizing and stretching the timing of our capital investments. This will help us diversify our investments across as many key markets as possible while remaining fully funded. Parallel with this cap ex prioritization we will continue to keep our eye on the long term success by building scale on a global basis with investments in people, processes and systems. We also believe that the current economic dislocation combined with our market leadership position could provide a silver lining as we go in to 2009. One example of this would be the potential opportunity to take advantage of partially built out or distressed date centers. Second, we may well see a flight to quality to Equinix due simply to our brand and financial staying power. In fact, we are already seeing additional demand from companies experiencing their own capital and operating costs constraint as outsourcing can be an attractive option during difficult times. Finally, limited access to capital could also further…

We’ll now begin the question and answer session. (Operator Instructions) Our first question comes from Jonathan Atkin – RBC Capital Markets. Jonathan Atkin – RBC Capital Markets: A question for Steve and maybe one for Keith, first off I’m wondering about kind of the tenure of your discussions with new customers and has that change given the market disruptions that we’ve seen over the last several weeks? Steve, you mentioned that there’s kind of been uncertainty in the budgeting process but if you could give a little bit more color as to kind of what you’re seeing out there in terms of customers’ decision cycles, maybe installation intervals and so forth? Then for Keith, I’m wondering in your 2009 revenue guidance the growth implicit in that, how much of that growth would you consider organic versus growth coming from newly opened facilities?

First of all we’re kind of doubling down, we’re not kind of we are doubling down on customer interface with our sales force and we’re having more frequent discussions with our customers. We’ve been doing that now for quite some time but dug a little bit deeper this previous quarter given the dislocation we’re experiencing. I would tell you that year-to-date we’ve seen virtually no impact to our pipeline, our bookings rate, deal velocity, average deal flow per sales rep, whatever category you want to look at, year-to-date we’ve just seen no impact to the current situation. I would suggest going forward as this thing shifts from consumer to business we have built a plan here that will be fully flexible to adjust to any changes in that. But, even as we look in to our pipeline Jonathan, we just don’t see any let up in the demand for this offering. I guess the simplest way for me to think about it is this stuff is mission critical as you all know and it is by no means, in the conversations we’ve had with our customers, making it anywhere near the discretionary bucket. So, as they look at cutting costs I think we’re actually going to see more demand coming at us for companies that are pressured for cap ex and op ex. We’re already starting to see that in our pipeline now and if you look at the number of new customers we’ve taken on the last couple of quarters I think it’s proof point.

Jonathan, addressing your second point, it’s a very good question. We actually have tracked it but let me give you some anecdotal comments. Clearly, when you look at the Asia market, the new capacity that we’re desperate to bring on, on Sydney, our Singapore and our Hong Kong market that Steve alluded to, a lot of that capacity is already spoken for so as we look forward to our Asia Pacific revenues in to 2009, a lot of that is coming from our newer build. Equally so, when you look at the European market having build capacity in Paris, in Amsterdam, in Frankfurt, a lot of that new capacity is going to support the growth and again, as Steve alluded to we’ve had a lot of pre-bookings and pre-sells of those assets. So again, a lot of that growth will come from the newer assets. But, it’s fair to say there’s a certain amount of base that we’ll use that are not new assets for our European growth. Then equally, so when you look at the US region, we do have a number of builds underway, as you are aware. Certainly, some of the growth is going to come from the new builds but the majority of the growth is going to come from our existing IBXs. So, I think that gives you a fairly good sense of it’s going to be relatively well balanced but it is going to be somewhat affected by the regions. I guess the last point I’d leave you with just to give you a sense, any time we give forward guidance, despite the fact that we’re giving guidance on a Q3 call for 2009 we generally have fairly good confidence I the numbers and today, consistent with last year looking at our exit rate you’re roughly at 85% of your midpoint of revenue number for 2009. Jonathan Atkin – RBC Capital Markets: Then on the revenue mix, new versus existing, the 50% to 80% range, where were you this quarter?

Just under 60% for the quarter. Jonathan Atkin – RBC Capital Markets: From new customers?

Pardon me Jonathan, I miss quoted.

Bookings from existing was roughly 70% and then the balance came from new.

Our next question comes from Christopher Larsen – Credit Suisse. Christopher Larsen – Credit Suisse: Keith, one of the things I noticed was that SG&A was actually down sequentially. I wondered if that is currency, is that efficiency, is there any sort of slowdown in sales that is associated with that? Then secondly Keith, if we could go through the cash, I just want to make sure I’m getting this right. If I take EBTIDA less cap ex for next year it looks like you’ll probably be in the positive and so you’ve got plenty of cash to fund it but you mentioned that you had some cash that will be locked up until May of ’09. I just want to reassure there’s no impact to your ability to finance any of the stuff that you’ve planned out regardless of the fact that some of that cash is locked up until then? And, is any of that covered under the government’s recent guarantees of overnight balances?

Let me deal with your first question on SG&A, we had some discreet projects in Q2. As we mentioned, we had a fairly large consulting project to look at ways to scale our IT organization and hence my comment on Q4 investment so, there was that discreet project for about $1 million with a large consulting firm. That was in Q2. In addition, we had a fairly large expense related to our European Oracle implementation and that was in the Q2 numbers as well. But, it’s fair to say and as Steve alluded to in his comments, we are focused today on managing our discretionary cash and we’re certainly going to continue to do that in these uncertain times. That said, there’s nothing extraordinary about what happened. In fact, again I want to refer back to Steve’s comments, he said that the booking activities this past quarter and hence the sales compensation attributed to that was high. So, it’s not from the sales side of the equation, it is really about managing our expenses. Moving to your comment on cash, as I said it is with the primary – the money market fund that we’re in as I think many people on the phone are aware, it is the one of the ones that broke the box. As I mentioned, the majority of the assets are to mature by May of 2009 but in fact, when we were on their website at the beginning of the week we thought that we were going to get roughly 32% of the balance this week. We have not received it yet. The fund itself is currently under the supervision of the external auditors which is KPMG and the SEC so I think they’re going through a fairly diligent process on how to distribute…

Well, as you might imagine we are getting a look at a couple of opportunities that are starting to emerge. We expect to probably look at some more as the quarter goes on, as we get in to 2009. But, as I said, we’re fully funded so we’ll be using the capital bucket that we’ve laid out to you to move it around and be as flexible as possible. So, if we see an opportunity in a market where it provides the opportunity to go buy something that’s partially built and we can get the advantage of time and reducs to cap ex, we’re going to look at those opportunities.

Let me just follow up with what Steve said. Chris, Steve and I spend a lot of energy on managing the cash flow now and it’s fair to say irrespective of what we do whether it is buying distressed assets or not we’re never going to put ourselves in what we call an unfunded position. I think that is a fairly significant theme throughout our scripts today so I certainly would like to leave you with that thought.

Our next question comes from Srinivas Anantha – Oppenheimer & Co. Srinivas Anantha – Oppenheimer & Co.: Two questions, Steve I now you guys talked about pretty strong pricing trends, given the macro environment that we are in could you just talk about how your conversations with customers are now a days and are you seeing any push back on that particular front? Then secondly, Keith with respect to margins, it looks like Europe margins mainly on the EBITDA seemed to have been improving quite a bit. As we look in to 2009 and given the expansions, how much more margin expansion can we expect here?

I would tell you on pricing no big change since really the last two quarters in terms of pressure from customers. Actually, in Europe, we’re actually seeing on a per KW basis a bit of an increase across several of the countries over there on our pricing schemes. I think as we develop and position the total interconnection offering and bring Equinix in to full fold in Europe, we’re going to see the opportunity – we’re charging for cross connect now, we’ve got ourselves set up with our arrangements with LINX and AMS-IX and [Dkick]. So, I think on a go forward basis in Europe we’re going to be in good shape. We as in the US and Asia I would tell you that we’re still seeing very strong pricing. We’re remaining and holding ourselves true to up around list in most cases. The demand has not let up enough at all for us to even begin to be concerned about pricing now particularly in anything that’s got a direct connection to our eco system or a direct connection to the interconnection business.

Then just on your question on the margin profile in Europe, clearly no surprise to you or other people on the phone the European team has been investing fairly heavily over the last little while so now that we’ve got great momentum on the revenue line you’re seeing a lot of that benefit drop down to the EBITDA line. It’s a different stage of its evolution than that of the Asia Pacific region or for that matter the US market. So going forward as we continue to scale the European region, as you know we’re investing in a number of markets, I think you’re going to continue to see the margins increase in that region. Having said that though, we’ve been fairly open about the fact that we wanted to invest more heavily in the core infrastructure in the European market to give Eric Schwartz and his team more support not only as it relates to people but systems and tools as well. So from our perspective we’ll be taking some of that growth and we will be reinvesting it back in the business. On a go forward basis it’s fair to say that the margin profile across all of our markets absent expansion we’re seeing increasing margin profiles. Srinivas Anantha – Oppenheimer & Co.: Just one question on cap ex, in the past whenever you guys gave guidance or cap ex you guys start with the lower number and then as you proceed along the year you guys gradually increase the cap ex number. Is that something we should expect for 2009 or the cap ex number you have given is a fairly conservative number and even if there’s going to be an uptick in that number it’s going to be fairly minimal. Also, I know you guys announced expansions in London and Singapore. Is possible can I get the utilization of your London center that was just opened as well as in Singapore?

Addressing cap ex again, I want to refer you back to Steve’s comments and again we’ve certainly put a fairly broad range in our cap ex guidance. We’ve also as we said put $50 million to deal with other potential opportunities. Certainly from our perspective we’re very aware of the market, obviously we’re very much aware of the capital markets and whether we could raise additional debt on any of our facilities. Having said that, we’re building our plan to remain fully funded and always keep certainly a minimum amount of cash on our balance sheet. It is fair to say that we don’t think we’ve given you conservative guidance at this point. But, going forward I think one of the things we need to realize is if the opportunity is there the company has always executed against that opportunity and it’s not to say that there’s anything out there that we’re sort of sandbagging today. We think we’ve given you a good plan that really stretches the capital not only across a different kind of horizon but it also stretches it in to various markets and so you’ve got the diversity that you want. I think that’s exactly what we’ve tried to accomplish while at the same time trying to make sure that we can fund it from our balance sheet and our operating cash flows.

I’d tell you on the Singapore asset it’s at capacity today on the original so we’re down to managing very tightly in the current Singapore facility so we’ll have to manage that capacity between now and the third quarter of ’09. Then in London, London 4 has got quite a bit of capability left in the second phase but then again we’re not bringing London 5 on until first quarter of 2010 so we’ll manage that capacity through that time and plan. As I said, we’re actually quarantining part of that space off to get the interconnection business jump started in that market also. So, we feel really good about where we are with avoiding going dark if you will in that market.

Our next question comes from Jonathan Schildkraut – Jefferies & Co. Jonathan Schildkraut – Jefferies & Co.: I wanted to start with a question on the currency headwind. Just based on your number it appears that currency for the fourth quarter will be about $10.5 million, is that correct?

That is correct. Jonathan Schildkraut – Jefferies & Co.: Also, can you tell us a little bit about power costs? In the past as power costs have risen certainly you’ve been able to bring up the cost that you charge to your customers. I know that you had a power price increase at the beginning of the summer. Power costs are now starting to fall, how long term are your contracts around power? Do you see a benefit if power prices fall? Your contracts allow you to raise prices on power to your customers, do you then bring them down? Is it something that you adjust regularly or will you see an incremental margin benefit as your costs on power fall but you maintain the pricing increases?

Let me first start with power as a percentage of our revenues is consistent with what we’ve seen in Q3 of any fiscal year and that’s 14% of our revenues. It’s also fair to say that although we did put some price increases in, we as a company have been very focused on not necessarily turning around and pushing price increases across all of our customer base. We have to look at each customer uniquely and decide both where and when it’s appropriate to increase pricing. Having said that, there’s certainly a couple of markets where we have entered in to power purchase agreements with the unregulated provider. There are other markets such as Chicago that’s coming up for renegotiation in December. Clearly, with oil and gas falling it certainly puts us in a better position than it did six or 12 months ago but overall we certainly are managing our costs. It would be atypical for us to adjust our power pricing down because it doesn’t just relate to the consumption of the power, remember it’s about the people in the IBX, it’s about the gear that we run, it’s about the maintenance programs and all the ancillary costs of managing the infrastructure. So, that’s something we haven’t done in our history that I’m aware of so it’s not something that I would speculate we would do going forward. Jonathan Schildkraut – Jefferies & Co.: Final question here, can you just give us a color on any changes in the competitive environment? One of the things that we certainly are hearing and Steve confirmed it in his comments about some of the data centers out there which were not fully funded could come up as distressed assets and some other construction projects not getting done. In general though are you seeing any change in the competitive environment or are you seeing a greater competition from some of the larger guys with smaller guys fading away or is it still kind of roughly the same competitive environment?

I think as a general statement Jonathan I’d say it’s generally the same although in the smaller guys we’re starting to see tail off and not show up in the competitive win loss data that we study every quarter. For example, in the Singapore market when we made the Singapore decision there were several local companies, I guess you could call speculative builds that had funding and then all of a sudden magically as we studied the market and made the decision to do Singapore 2, had faded away. So virtually there’s no new capacity coming on in Singapore as we made this decision. We have examples of that by market but in the big markets in the US Jonathan we’re still seeing the typical competitors. In the New York market it’s the same couple of competitors particularly for the financial exchange activity. But, I have to tell you our win rate is still north of 80% to 85%. We just have not seen any degradation in win/loss rates. That’s just another single to me of the strength of the model and the proposition here. Jonathan Schildkraut – Jefferies & Co.: Actually, you bring up an interesting topic, the financial exchange. Obviously you’ve had great success extending that from Chicago to New York. I know that you’re in the early processes of getting it in Frankfurt and London. What are the plans around maybe Tokyo or Hong Kong?

Well that whole eco system Jonathan as you know a little bit about that, we are extending that across all regions today. The demands we see there are pretty consistent. Network connectivity has become the primary driver for these guys so where we have density of networks we are advantaged. We don’t see any let up in their demand in terms of their bandwidth requirements. They still have to plan their platforms around surge capacity, they’re still growing. They like our service delivery. They like the fact that we’re still expanding which gives them contiguous space. There’s still I think somewhere in the order of magnitude of 20% to 30% of these firms that still have not gone to electronic trading. We’re still very focused on the matching engines and on the access pops and getting those guys in so that we can get the members to connect in to them because they still look like a magnet to the members. We’re pushing this forward across the board. I think we’ll see black box trading increasing also. I think I read somewhere recently that there’s going to be somewhere in the next two to three years a 400% increase in the trading infrastructure spend just to support the algorithmic black box trading activity. Jonathan Schildkraut – Jefferies & Co.: That should help volatility.

Maybe Jon, one of the final points, if you look at the Top 10 markets globally for financials, those are the markets that we’re in; London, Frankfurt, Tokyo, New York and Chicago; you get customers in some cases that start out in one market and then want to expand to the others. So having this global reach has been really important for that vertical in particular and going forward. Jonathan Schildkraut – Jefferies & Co.: So are you seeing the financial exchange partner that you had in Chicago come to New York and then move into your other markets or are you attracting a new group of financial partners in every new market? And as a corollary to that, could you give us a little bit more color on what you feel like your exposure is to the financial services group? I’m not talking about from a percent of revenue perspective but just in general. I think there’s been a lot of concern about some of the forced consolidation that’s going on and how that might impact your results?

I’d say to your first question Jonathan, we’re seeing both. We’re seeing it come at us from both ways and as I mentioned in my script we signed on the Hong Kong Mercantile Exchange in the Hong Kong market which when you see a guy like that is going to attract many other players to come into that center to connect. We are seeing requests for movement from Chicago to New York, London to Frankfurt. So I think there’s going to be emerging requirements that we’re going to see that are going to have us take on metro to metro connectivity. We’re going to have to go figure out ways through that with our partners. It’s growing and this is a great spot for us to be in. It’s all about latency and proximity. We bring a great advantage to them for this. As I talk to these folks, network connectivity is at the heart and it is the primary driver for these guys. It’s hugely advantaging us as we build this ecosystem. And it’s growing at a pretty alarming pace. Just in Asia alone our peering traffic alone since early 2008 has grown by 10 times. Some of that’s fed by the peering network content activity; some of it’s going to start to be fed by the financial exchanges. So it’s going to give us a good lift in cross connects; it’s going to give us a good lift in the interconnection revenue in total to supplement the peering activity that’s been here for quite some time.

Jonathan, to the second piece of your question really was on the exposure related to financial via consolidation. As I think through the more prominent accounts such as Lehman, Bear, Wachovia, WaMu, at one time we had a little bit of exposure to WaMu but my recollection is they moved out about a year or two ago. But overall there’s very little exposure to those types of entities. We do have Merrill and we do have Bank of America in our facilities so there’s some overlap but nothing that is sizable and we don’t expect that bottom line factored in for the 2% churn that we expect on a go-forward quarter. Jonathan Schildkraut – Jefferies & Co.: Steve, when you were talking about peering traffic, are you talking over the gigabit or 10 gigabit Ethernet switch or are you including cross connects in that?

It could be both but I’m mostly referring to getting ourselves set up with our exchange platforms in Europe. The growth in Asia that I mentioned is a little bit of both but it’s mostly cross connects.

Our next question comes from Michael Rollins - Citigroup.

With respect to your guidance for 2009, I was wondering if you could help us think about that regionally? Is there a certain region where you’re seeing incremental strength over another region and just the way to think about currency rates, are there any differences that you’re applying in terms of Europe versus Asia in terms of any changes there from fourth quarter? The second question I just had was, taking a look at more detail in the possibility of your company qualifying as a REIT some day and if you looked into that and what the status of that investigation is? Finally, a question on how you’re thinking about investments. As you’re thinking about making incremental investments, given the current market conditions are you changing any of your assumptions for internal rate of returns or are you also thinking about that relative to the current share price and how to think about investing it in new center versus investing in your own centers vis-à-vis a possible stock repurchase program?

Let me start and then Keith can add some color here. As we built our guidance, I would tell you that because we’re seeing strength across all the regions at a similar growth rate I think we spread the wealth as we thought through the guidance. I built a pretty balanced plan not heavily weighted toward any one region in particular growth rate. Obviously we’re receiving the currency headwinds from Asia and Europe but I think we built a pretty balanced plan across all [inaudible]. End state status, we spent a little bit of time thinking about that. You mentioned one alternative. We are exploring obviously that and other possibilities all the time. We’ve built an ’09 plan but we’ve got a five-year plan that we take to the Board every quarter. We look at all kinds of alternatives. I would tell you that that’s one of a handful that are being considered here on an ongoing basis.

Following up on what Steve said, on currency I could give you the rates at least on the European side. Again recognizing the Euro represents 13% of our targeted revenue for ’09 and the Sterling represents 10%. We are using today, although who knows where it’s going to go, we consider it to be a relatively low rate which will cost you $1.28 to buy a Euro and $1.26 to buy a pound. As I look into the Asia Pacific region, a couple things. The Yen has been strengthening as you probably know. 98 Yen to the dollar today. Not long ago it was 110 Yen to the dollar. So we’ve got a little bit of offset there. Again though recognizing Japanese Yen and the revenue attributed to that currency is relatively low at less than 5%. The last point I’d like to make is certainly we’re having success in Hong Kong. It’s a collar currency and we believe we’re absorbing the fairly dramatic impact on the Aussie dollar and that’s reflected in our guidance. That’s a general sense around currency. We’re not trying to pick the market. We just give you the guidance based on these factors and clearly as I mentioned in the preamble to my script, it’s going to move. The question is it going to move up or down and we all have differing views on whether the US dollar should be a stronger or weaker currency than its compatriots. I’ll let everybody draw their own conclusions but at least you know what rate we’re using and what percentage of revenue. The second thing that was important that you asked was REIT. We certainly have heeded the advice of many. We are continuing to look at the REIT status. I did want to give everybody a…

It looked like in the quarter the non-recurring revenue was up a little bit more. Does that infer something about volumes in the future or is that reflective of a different type of business that you might be booking in the numbers?

There’s a couple things that go on in non-recurring. Some of it is the increases and decreases in our sales allowance or the reserve against our revenue. In other cases it relates to the amount of booking activity that we experienced in the quarter related to MRR booked. So we do track the company how much MRR we generate relative to an MRR dollar, and this quarter happened to be a meaningfully higher one than we’ve seen in the past. Then I guess the third piece really relates to our Smart Hands and the amount of activity, our professional remote end business. So between all of these that causes it to move around a little bit but there is nothing out of the ordinary in this quarter. I should mention in some cases like we did last quarter we had an equipment sale in our Asian market and sometimes when we have an equipment sale tied to a customer relationship that will affect normal occurring revenues and we report it on a gross basis. So it does reflect the full value inside that non-recurring revenue line.

Our next question comes from [Michael Bowen]. [Michael Bowen]: One point of clarification, when you were talking about a prior question on SG&A, you talked about a couple discreet projects with consulting firms and you kept mentioning 2Q and I want to make sure I either understood that was it a second quarter project that then would have flowed into third quarter or did you actually mean third quarter?

What the comment was there is, why did our SG&A go down relative to Q2? Because of that I was saying that we had discreet projects in Q2 that we did not spend in Q3. We had an unseasonally high SG&A number in Q2 so as you look into Q3 of course we have the benefit of not spending that. And as we go forward, Steve alluded to the fact that we’re really managing our costs and making sure that capital stays on the balance sheet and funds our expansion. [Michael Bowen]: So this quarter then we should consider more of a normalized quarter if you will?

That’s correct. [Michael Bowen]: A couple things I’m trying to get my arms around. With regard to your customers now coming up, obviously they’re going to be doing a lot of budgeting in December and January planning what they want to spend for outsourcing with you coming up. The first question is, as they go through that budgeting process, how quickly will you get an insight into a large percentage of your funnel? Second point of that would be, how much of your MRR at this point, particularly of the 81% colocation revenue in your mix, how much of that is coming up for renewal and obviously that depends upon your average length of contract and that’s kind of where I’m going with that? And last question is, can you talk just a little bit about interconnection revenue pricing? There was chatter during the quarter that that had weakened and I wanted to give you guys an opportunity to address that. It looks like from the absolute dollar standpoint it did not but what are you seeing in the interconnection revenue?

I’ll start out with what we’re hearing from our customer segments. We actually have a pretty ongoing program here where we meet with key customer segments. So this time of year actually we just finished with a big segment, with our network segment, and do a pretty deep dive with key players to look as far out as we can. Some can go out to 18 months but we get a pretty good look into ’09 on what their plans are. I would tell you the general theme from the networks are they’re going to keep upgrading networks, they’re going to keep growing business in the current existing spots that they’re doing business with, a little less likely that they’d go to a brand new market. It’d be hard to go convince a big carrier today to go into a Tier 2 market if we decided we wanted to go do that, but in general we don’t see any let up in the current course and speed of what we’re receiving from those players. We’re getting ready to do the same thing with another big vertical here next week and we’ll dig in with them on the same type of level and get direct feedback on budget. We have a good mechanism in place here where our sales teams extract pretty good information and I would say we have solid information for 12 months and in some cases we can go out to 18 months. Across the board, as I mentioned in my comments, we just do not see any let up in the demand that we’re seeing across all four verticals. In this quarter we had a little bit of I wouldn’t call it slowdown but a little less growth if you will with digital media. But across our four big segments, growth is continuing at the same pace. [Michael Bowen]: How often do you talk with each key customer because obviously in this environment things are moving pretty quickly? They could change their minds literally on a monthly basis.

We have over 2,200 customers so it’s pretty hard. We talk to them in big chunks. Of course our sales force is talking to them all the time. Our marketing engine here is collecting information on them on a monthly basis. We look at it quarterly. I would tell you we have a pretty good pulse rate in terms of what’s going on with our customer base through our sales force. We feel pretty good about having pretty good visibility there. [Michael Bowen]: Lastly, on the interconnection?

We have gone through a recent repricing of our exchange offering which is 4% of our interconnection but 4% of our total revenue. It’s not the cross connects; it’s our exchange switch and we’ve actually just rolled out a global program to bring it more in line with market pricing. So we have a very measured program that’s been actually introduced in the month of September. We’ve had a very big uptake out of the gate. We’re going to look for working with our current customers to reprice current contracts. Out of this we expect to get new ports, we expect to get upgrades in the ports, we expect to get extended contract terms, we probably will even see some colo pull-through as new network deployments start to show up once they see the pricing. We were call it a little out of whack in a couple markets in terms of how we were pricing our exchange product and we decided we needed to make a move, bring it more in line with market pricing. Customer receptivity has been very high. The sales engine is incented. We’ve got very detailed account plans. This’ll go on throughout the year of 2009. I see it as a very, very positive move for us.

Our next question comes from [Rob DiZaugo]. [Rob DiZaugo]: I have a question on the flexibility of the cap ex that you’ve been talking about. If demand slows and you decide you want to pull back the cap ex, is the low end of the guidance really the low end of where you could go? Given the long construction cycle, I want to kind of get a feel for if things are really tough in ’09, how low could you bring the cap ex down?

I think that is a great question and is one of the questions that we actually talk about internally here. That is certainly not the case. When you look at the capital that’s being committed, there’s certainly some elements of it but I would say that roughly 50% if we used the midpoint of the range, $350, I’d say you’re in the range of 50% to 60% is probably what is meaningfully committed in some form. You’re really dealing with roughly 40% odd that I think you could just turn off the spigot if you wanted to. So if all of a sudden we woke up tomorrow and who knows what’s happening, we needed to turn things down, we could turn that down very, very dramatically. In fact I don’t want to put a number out there but you can imagine how quickly you can turn off the things other than what you’ve already committed to. We’re under construction in Europe, we’re under construction in L.A., and we’re near fully constructed in a number of our other markets. But all the new ones that we’ve talked about today plus the $50 million basket that Steve alluded to, you don’t have to spend a lot of capital on those if you don’t want to starting tomorrow. [Rob DiZaugo]: Given the long construction cycle, at what point in ’09 would you reach the point of no return on that $350 capital? You could probably turn off 40% today but as we get into April, May, June of next year, is there a time period where you’re committed to that capital?

Recognizing it takes nine to 12 months to build an asset, once you’ve got the asset and you’ve pre-purchased or pre-committed for long-need items but there’s certainly when you look at the investment we’re making and some of the ones that we contemplated that Steve has alluded to again in his basket, some of those are back-ended to the back end of 2009. In other cases they’re front-loaded because we need the capacity. I think the point of no return certainly would be as we get to the midpoint of 2009 and beyond. That’s where you get to a point where you can have a less meaningful impact not only as it relates to your spending but also shifting your revenue around. [Rob DiZaugo]: On your backlog in the demand and the waiting list that I know you alluded to on past calls, can you not necessarily quantify the number but kind of where you are versus prior periods on your demand backlog and the waiting list on your data centers today?

In existing centers? [Rob DiZaugo]: Yes.

The backlog how we look at it is there’s really no change. If you’re referring to committed or you’re referring to the pipeline, what we see going forward, either end I would tell you we’re early in the fourth quarter. What we see early in this quarter is no different than what we saw when we looked at Q1, Q2 or Q3. That’s why I say we just do not see any impact to look for in pipeline activity or even the fill rate that we’ve got going on in our existing centers today. [Rob DiZaugo]: Are you seeing any customers that were reserved or you had thought were going to purchase space turning around and pulling out now in the last few weeks or the last month or so given the environment?

I can’t say for sure but that’s not something that we’re hearing inside the halls of Equinix. It’s fair to say that there probably are some small customers who have decided not to install for whatever reason, but it’s not again a subject matter we spend energy on at the company right now.

Our next question comes from Rodney Ratliff - Stanford Group Company.

You referenced this; it’s odd Steve that you brought this up in your prepared remarks because I’ve actually got it in my scripted questions, the phrase “flight to quality.” Have you actually seen any sort of flight to quality away from your less well-funded competitors? Given the EU expansion plans that you announced today, are you seeing any even anecdotal evidence that competitors may be having trouble lining up financing to do the same?

Sure. We’re seeing that every day. Without throwing names around, it’s going to start happening more and more. But the flight to quality, I would tell you in the 16 or 17 months I’ve been here I think I’ve seen it from day one to more pronounced today. It’s the old adage of, a CIO will never get fired for picking IBM.” A lot of our folks who end up picking us, it’s brand, it’s financial staying power, it’s reliability. You’re not going to get fired for picking Equinix if you’re in the colo and interconnection game. So absolutely we’re seeing that, and at the end of the day price and reliability are going to be a couple of the things that are going to fall to the final negotiations. Absolutely we’re getting chosen today because of the reliability and the brand and the staying power.

Could you talk a little bit about your expectations vis-à-vis the new interconnection agreements in Europe, meaning what effect on revenue growth and margins? I’m sure you’re pretty excited about it but can you maybe frame it for us a little bit better?

I think Keith has alluded to this in the past. It’s going to take a while. We’re starting to make very good progress in Asia and look how long we’ve been at the game in the Asia Pacific region. Step one for us this year was to get the infrastructure set up and we’ve done that. We are now starting to charge, I think we’re charging the equivalent of I want to say $100 for cross connects kind of US dollar kind of range, when that market wasn’t even doing that before. We’ve got activity in the pipeline today across all the regions in Europe so we’re starting to see it show up in the pipeline. We’ve got a couple markets as I mentioned in London where we’re actually harnessing off space just to aim at getting the interconnection business going.

Well, you yourself said that that was a paradigm shift for Europe.

Yes. [Inaudible] didn’t spend a lot of time and didn’t focus. They were selling medium and large side suites. Now most of the centers in Europe have that and shared colo space set ups. So the model’s in place. We’ve got a leader in region now that’s very familiar with the model. The team is very excited about it and it’s starting to take hold. It’s going to take a while to get meaningful margin improvement but we are going to start seeing it. Eric Schwartz is held accountable to go figure that out.

A couple of quick housekeeping things. If you haven’t answered this already; if you have I missed it; what was the growth in total network access traffic year-on-year? It was 225 gigs in Q2 so what was it in 3Q08 and 3Q07?

It was 235 gigabits per second. This is just a US stat. It’s up roughly 34% year-over-year. This is a traffic statistic. There are a lot of other stats that are in the back of the press release but that gives you a breakout there.

One last one for Keith. Did you mention an extra depreciation charge earlier? Did I hear that correctly?

No, I was just referring to Q3 and talking about net income that was $7.4 million positive net income that included incremental depreciation that you didn’t see in Q2 that affected Q3 because of the expansion.

Our last question comes from Mark Kelleher - Canaccord Adams.

I just want to talk about the Q4 cap ex. If we take the guidance that you gave for Q3 cap ex, it looks like it was about $30 million pushed into December. I know you mentioned that there was a push out. Can you talk about what that might be related to? Also the ongoing cap ex looks like it’s going to take a fairly good jump up in December.

Again there are a number of different assets. It’s fair to say when we look across the mix of investment in different markets, L.A. we’re pushing a little more into 2009 and transferring some of the capital. So we spend a little less in Q3 than we anticipated. Having said that, we’ve been accelerating as fast as we can our New York 4 Phase II build. Steve alluded to it again in his comments that we’re nearly sold out in our Phase I and we need that asset. We’re bringing some capacity on sooner than we originally anticipated so we’re spending some more cap ex there. Equally so when we deal with the ongoing, we’ve held it firm at $60 million primarily because there’s a number of very important projects both as it relates to single points of sale failure, network asset improvement and some other things that we’re doing as a business that we anticipate spending in Q4. I know it’s a big number but right now we really encourage the team to spend. If we need to get it done, let’s get it done in 2008. Let’s get it behind us and then let’s focus clearly on 2009 with a clean slate. So that’s why you’re seeing the effort. Frankly speaking it wouldn’t surprise me if absent an expansion, our team tends to spend less than they guide us to. It wouldn’t surprise me if we’re a little bit lower but right now we’re going to hold firm at our $60 million number.

It sounds like you’ve reallocated some assets from the L.A. build. Can you tell us what you’re seeing in that market that allows you to do that?

Yes. Just briefly, part of that is really driven by we don’t need that much capacity out of the gate in that market. I think given what’s going on in the market, it was just a prudent decision by us to reallocate that maybe to some core peering sites or core peering markets. So we’ll redirect that cap ex to help us make sure we keep from going dark in less markets and keep the lights on in more key markets. That’s just all about simple prioritization and stretching the capital. There’s no change in that demand in that market at all. This concludes our conference call today. Thank you for joining us.