Good afternoon, and welcome to the Equinix Conference Call. [Operator Instructions] I'd like to turn the call over to Jason Starr, Senior Director of Investor Relations. Sir, you may begin.

Good afternoon and welcome to our Q2 2010 Results Conference Call. Before we get started, I would like to remind everyone that some of the statements we'll be 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 the risks we identified in today's press release and those identified in our filings with the SEC, including our Form 10-K filed on February 22, 2010, and Form 10-Q filed on April 28, 2010. Equinix assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. In addition, in light of Regulation Fair Disclosure, it is Equinix’s policy not to comment on its financial guidance during the quarter unless it is done to an explicit public disclosure. In addition, we'll provide non-GAAP measures on today’s conference call. We provide a reconciliation of those measures, 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. For today's call, we posted a presentation on our website to help guide our discussion, and we would also like to remind you we provide important information about the company here as well. We encourage you to check this regularly for the most current information available. With us today are Steve Smith, Equinix’s Chief Executive Officer and President; Keith Taylor, Equinix’s Chief Financial Officer; and Jarrett Appleby, Equinix’s Chief Marketing Officer. Following our prepared remarks, we'll be taking questions from sell side analysts. In the interests of wrapping this call up in one hour, we’d like to ask these analysts to limit any follow-on questions to just one. At this time, I'll turn the call over to Steve.

Thank you, Jason. Good afternoon, and thanks for joining the call today. I'm pleased to announce that Equinix delivered another quarter of strong financial results with revenues coming in on target and adjusted EBITDA coming in above expectations. Importantly, both results were able to absorb the currency headwinds we experienced throughout the quarter. This is our 30th consecutive quarter of revenue and adjusted EBITDA growth and a strong proof point of the exceptional visibility we have in our financial model and a track record of strong execution. Highlights of the quarter include record gross bookings in all three regions, as we expected with the scaling of our growth plan in 2010, with the highest-ever outbound bookings for U.S.-based multinationals deploying critical infrastructure into both Europe and Asia, demonstrating the strength of our Global Services delivery platform. We also had strong interconnection growth across all three regions. With a significant pickup in cross connects, exchange ports and traffic on our switches. All construction projects are on schedule and on budget to deliver needed capacity throughout the remainder of 2010 and into next year. With our history of disciplined investments in expansions, we find ourselves in a very good position in terms of available capacity in the majority of our markets. From a vertical market perspective, we experienced the highest bookings we’ve had in the last six quarters in the electronic trading ecosystem. We also added 20 networks in key metros to take our count now to over 595 globally. And finally, we added 20 new cloud customers and continue to see both public and private cloud deployments across all regions. On the operational front, our teams across the globe are delivering extremely high levels of reliability within our IBXs and exceeding service-level objectives for our customers. Lastly, our integration of Switch and Data is ahead of schedule on several key milestones which I will provide more detail on shortly. I will also provide you with information that illustrates the importance of our expansion strategy and a breakout of the strong financial results and return on investment we've experienced over the last several years. Let me pause here and turn it over to Keith, who will review our financial results and regional trends in the quarter. Over to you, Keith.

Great, thanks, Steve, and good afternoon to everyone on the call. I'm pleased to provide you with a review of our second quarter results as well as a snapshot of progress in each of our three regional segments. So starting on Slide 5 from the presentation that we posted today, as you can see, Global future revenues were $296.1 million, a 19% quarter-over-quarter increase and up 39% over the same quarter last year. This includes approximately $37.6 million of revenues from Switch and Data for the two months starting May 1 and is in line with our expectations. Due to the strengthening of the U.S. dollar throughout the quarter, total revenues were negatively impacted by $3.4 million in FX compared to our guidance and $5 million when you compare it to the average rates reported in Q1. With the recent movement in some of the FX reporting currencies, we've adjusted Q3 and Q4 guidance rates to $1.30 dollar to the euro and $1.40 Sing to the U.S. dollar. We've left the pound unchanged at $1.56 to the pound. Collectively, this has a negative translation effect of about $4 million on our updated 2010 revenue guidance. Also with the Switch and Data acquisition, we've updated the Global revenue breakdown by currency. Euro and pound represent 13% and 7% of Global revenues, respectively, and the Sing dollar represents about 5% of Global revenues. As Steve mentioned, bookings in the quarter were solid in all three regions, representing our strongest organic gross bookings quarter with particular strength in Europe and Asia. Organic MRR churn for the quarter came in at 2.2% and in line with our expected range of 1.5% to 2.5% per quarter. The company recognized gross profit of $133.5 million for the quarter or gross profit margin of 45%. Cash gross…

Thanks, Keith. Now if you turn to Slide 10, I’d like to review our progress with the Switch and Data integration. As I mentioned earlier, we are ahead of schedule and have been able to accelerate the timing to realize the initial cost synergies for 2010. Overall, the integration is proceeding very well with key milestones in place and our final objective to have full code to cash integration completed by Q2 2011. First, let me state that the cultural alignment between our employees has been a bright spot in the integration. In particular, we've been impressed with the operational excellence and customer focus across the Switch and Data team. We've obviously had to make some tough decisions in achieving our synergy targets yet we're bringing a very strong team into the Equinix fold. We are on track to achieve the $20 million cost synergies previously outlined and have moved aggressively towards this goal. During our call in May, we indicated our target was to realize half of these by the end of 2010. We are pleased to report that we now expect 75% of these synergies to be recognized by the end of the year. As a result, 2010 synergies are expected to exceed integration costs by $4 million, a $6 million swing in our favor compared to our earlier expectations. And one other financial benefit I wanted to mention is that we now believe that the NOLs to be realized from Switch and Data are likely greater than originally planned and will further extend the time frame until Equinix pays significant cash taxes in the U.S. Shifting gears to revenue synergies, we've established a strong foundation for driving revenue across the integrated platform. We've had early success with 12 cross entity deals and also saw orders for new…

[Operator Instructions] Our first question comes from Chris Larsen of Piper Jaffray.

First of all, in Europe, can you talk a little bit about if you saw any slowdown in May in terms of order sales? It looks like maybe that may have picked up in June, but we’d heard some slowdowns there and that there was actually a lengthening of the distance from when a customer would initiate to sign, to install and if you've seen any difference in that, if that's accelerated, improved or worsened? And then, Steve, can you talk a little bit how -- you did a great job laying out all the capital demands, particularly for this year, but how you're going to balance growth versus free cash flow into 2011 and 2012 or beyond and how you think about that?

So I’ll take the first question. So on the European activity, I think, that there's a couple interesting points certainly when you look at my comment. First and foremost, you saw that we added a lot of new capacity in Europe in the quarter. But you also saw there was a lot of installations and although a lot of it’s at quarter end billing cabinets in the quarter. So I would tell you what we're seeing in Europe is a lot of momentum both from the local market, but equally so, from the other markets or the other regions selling into Europe, particularly the U.S. It had a record activity of selling activity from U.S.-based companies into the European theater. So from our perspective, we didn't see any meaningful slowdown in the May period, at least seen here at the corporate office.

And then the second question, Chris, I think the decision on the free cash flow and growth will hover around the flexibility that I just described around our capital allocation plans. I think we're going to study very closely fill-reg, demand, pricing, pipeline, bookings, all the things I mentioned remain very data-driven in our decisions, and then manage ourself. So our goal as a company is as long as the demand is there and we’re achieving the fill rates that we've been experiencing, we want to avoid going dark as we call it internally in the market. So we're doing a very good job across the 35 metros in the three regions tracking our fill rates and making predictions just as we just announced the next phase in Singapore is a good example of this. We're 75% bookings are full in the first phase in Singapore today. Phase II has an extremely high fill rate coming at us. So as we look down the calendar, we see that we're going to have to bring Phase III on at a time when we know we’re getting ready to fill up Phase II. So that's the way we’re running the business. The return profile has not changed at all. The numbers I just laid out on the chart is exactly the discipline we’re managing to. And I would tell you, it's just more of the same.

Our next question comes from Jonathan Atkin of RBC Capital Markets.

I'm wondering how you might characterize the competitive environment in terms of pricing behavior by your peers and particularly in markets or regions where there's a lot of supply coming on line. And then I'm curious, with regard to deal sizes on balance as you add more capacity and still looks like your long-term revenue target implies a fairly ambitious revenue ramp. Are you doing larger deal sizes on average than you were, say, two years ago?

Sure, Jonathan. Let me start. Keith can probably add a little color there too. On the competitive front, it does vary by metro, by market. I would tell you in the U.S., the statement you made is -- we're seeing a little bit of that in the L.A. market. And I think because of the competitive supply that we see in Phoenix and Vegas and also in the L.A. market. So there are certain markets where we're certain pricing pressure and pricing behaviors are going to change. But that's not terribly different than what we've experienced over several quarters. And so in certain markets, we're going to get some pricing pressure on certain deals. If it’s a strategic deal and it’s a magnetic deal for us, we’ll get more aggressive. If it's not, we're going to let it go and whether it goes to a competitive retailer or a wholesale business, so be it. We're maintaining the discipline on the floors and ceilings we have on our pricing and the sales forces are staying very, very disciplined on price. So I wouldn't tell you it's in very many markets. It's in a couple of places and on a couple of deals where we’re seeing this, as you called it, pricing behavior get a little goofy. In terms of deal sizes, as we open up a new phase or a new IBX in particular, we tend to follow the same formula that we've done in the past. If we have an anchor that's magnetic-like, or that's going to get it jumpstarted for us in the right vertical, we will tend to do a larger deal that’s anchor-like to get the IBX jumpstarted. But in general, when a deal gets to a certain size, call it 250, 300, 400 KW of power, call it a quarter to a half a megawatt of power, it tends to get more crowded in terms of competition. And if it's a strategic deal, we might hang in there for a while. If it's not, we're going to let it go to the wholesale or to the competitors.

And, Jon, just a couple other quick comments on… I think what we also are seeing, and you asked really what's gone on over the last couple of years. I think, number one, our customers – we’re still winning a lot of business from our install base. So although we announced this quarter we added roughly 190 new customers, roughly 80% of our quarterly growth came from the install base again. So it tends to be companies who are continuing to grow with us, and it's not always that size. I would say the remaining 20% sometimes can have a little bit larger size to it because it’s initial deployment. But absent that, you're releasing a lot of follow-on business from our install base. And that's why I would tend to tell you it’s probably a little bit of the same. We haven't seen much change over the last few years.

If I could follow up briefly on the slide where you give the first page, U.S. IBXs and the 6% annual revenue growth. What portion of that price increase or that pricing lift is selling additional cross-connects versus raising rates?

Well certainly there's an element of raising rates in some of our install base. But a lot of it, you've got to appreciate, as we build the density and sort of the strategic discipline around these IBXs, we are looking for more cross-connects. So certainly, that's an element of it. But the second piece is customers. If they change their infrastructure that will bring in more power. And then, of course, there's some circumstances where we do modify pricing, either as defined in the contract or because the customer’s perhaps not at the market rates for that given IBX or that given area.

Lastly on the churn, looking into the second half, is there any kind of swing factors that would cause it to be kind of at the upper end of that range that you mentioned 1.5 to 2.5 or the lower end, in any of your regions?

I would say overall, and we look at this on a Global basis, we are very comfortable on the ranges that we have. We recognize there are some deployments that are of a little bit larger size that we are looking at that might churn out or a portion of it might churn out. But that's why we basically broadened the range to give us the ability to sort of size it for each thing that we think will always be in one size of the range versus the other. But overall right now, I wouldn't be able to tell you anything specific that we're seeing. But we do feel comfortable that roughly on average, 2% per quarter as we average it over the year. And that's sort of something we've said over the last many years. So we just want to give you a broader range in any given quarter.

Our next question comes from Michael Rollins of Citi Investment Research.

First, I was wondering if you could give us a sense a little bit more about pro forma Switch and Data so that one month at the beginning of the quarter, if you can give us some sense of maybe how Switch did on revenue and EBITDA and anything else specific there that makes it easier for us to understand the correct sequentials between 2Q and 3Q? The second question I had was, if you could talk a little bit about CapEx. So within your CapEx guidance, in the past, you’ve had some room of unannounced projects. Could you give us an update as to what that variance might be currently? And then just a final question, if you can give us more of an update on booking activity in the U.S. and maybe a little bit more of what you're seeing as you're turning on some new centers late in 2Q and in 3Q?

So let me take the first two, and then Steve will take the third one. As it relates to Switch and Data, there's a little bit of noise as you can appreciate for a couple of reasons. Number one, we changed the methodology in which we record and book accounts relative to what Switch and Data had done in the past. We also wiped out their further installation on April 30. So effectively you’re starting different. But if I actually had to pro forma it, it's been relatively steady in the quarter. So if you took the $37.6 million that we reported for May and June, it'd be fair to say if you just put that into a full quarter, that's going to be roughly what you would get for Switch and Data on a full quarterly basis. The other thing, I think it's important to note there is that we talked about 200 incremental cabinets associated with the Switch and Data assets. As Steve alluded to the fact, we're starting to see now that we've sort of reorganized the sales organization, we are starting to see renewed momentum. We haven't seen a meaningful influence yet in the numbers that we've reported, but I think what you're going to see on a go-forward basis more momentum into the Switch and Data assets. So that deals with that. The second question that you had was on CapEx. With the guidance we offered, there's a number of small expansions that we’re doing both in Europe and in the U.S., that we typically don’t announce, they’re too small, but overall when we look at the unutilized capital, we’re roughly somewhere between $20 million and $30 million right now. And so, last quarter, we were roughly $50 million, now we’re at $20 million or $30 million. So that's what you see as the unallocated in that bucket of $535 million to $580 million.

And, Mike, on the booking activity in the U.S., it's obviously gotten a little more complex with the integration of Switch and Data. But what I would tell you is that as you heard me mention, we had a record gross bookings quarter in the U.S. and the highest outbound deal flow from multinationals going to Asia and Europe. I don't know if Keith mentioned it or not, but we did, I think, about 89 new logos, about 67 of those were organic and about 22 were from Switch and Data. And about 82% of the base was from existing growth on the base. So pretty steady in terms of that. So the job in front of us now is the sales force has been completely integrated. As I mentioned, all synergies, costs synergies are out of the sales force. So they're completely focused on coverage of the North American market and growing bookings. And obviously, as part of that, it's built the bookings plan for this year. Bookings are built on a larger plan this year than they were last year obviously. And the team is on track to hit those numbers. So I'm very, very happy with what the U.S., the North America team is doing. Feel very good about the second half. They had a great second quarter. Second quarters have been good for us in North America historically. But we feel very good about the second half of the year.

And just to follow up, you talked about the opportunity to build out more ecosystems, and you've highlighted in the past and on this call the success you've had in financials. Can you talk about maybe some of the traction you're seeing in other ecosystems? And are there some tangible numbers that investors should be thinking about in trying to track that progress for you guys?

Yes, well let me give you just a couple of sound bites and Jarrett’s sitting here with us. He might be able to add a couple of things. I don't know how tangible we’re going to be able to get around things like our cloud and IT systems. Let me start there though. First of all, on the back of the electronic trading. Let me start with electronic trading. I think we put a press release out this quarter that gave you some sense of the order of magnitude of what we've started to assemble in that ecosystem, and it's continuing to grow globally. You saw some of the announcements this quarter. Just in New York alone, we're upwards of 20 machigins [ph 57:34] deployed in that market. And so we're accumulating mass and as you heard Keith mention, members are starting to come in and connect to these machigins [ph 57:40]and these nodes, and we’re starting to see the cross-connects starting to go up. It’s exactly what we predicted. So we're very targeted on who we want to go after next around the world. So that ecosystem is shaping up very nicely. The pairing ecosystem continues to grow, and that’s the hub of all these other ecosystems that they sit on top of. The next area that we're starting to get a lot of traction, and we probably can’t provide a lot of quantification today, but it's around mobile data. And I would tell you that we’re starting to accumulate some of the key nodes from key mobile players that again, in the same manner as we are in the electronic trading, once you get a key node or a key aggregation point, other members have to come in and connect to it. And in this case around mobile data, it’s going to be the wireless carriers that need to come in and connect to it. So that's starting to shape up and move in the right direction. We're not sure yet if there's anything that would look like an ecosystem inside the cloud, but we do know that we're accumulating public and private cloud deployments at a very strong pace as we think about just the buildup of that business. So we're dealing with hundreds of these deployments now across many, many markets, and we're looking horizontally at key applications with these cloud deployments that we think we can start to think about trading ecosystem-like growth.

Just a quick build on that. On the pairing side, the gaming guys are coming in, leveraging the pairing infrastructure, the mobile guys are using that. And the cloud guys. So again they're building on these ecosystems and the platforms, and we'll see how far it goes with each of these communities.

Your next question comes from Mike McCormack of JP Morgan. Michael McCormack - JP Morgan Chase & Co: Obviously a pretty strong recovery in the billing cabinets here in the U.S. Can you give us a sense for sort of breaking down the improvement there between increased sellable capacity versus -- you say you're pretty stable on price, but any promotional activity in the marketplace? And then any internal change whether it's your sales force or organization that improved those adds as well?

Yes, Mike, I would tell you not a big change. I think we explained fairly well last quarter why we saw a flatness, and we knew it was going to be a one-quarter anomaly. And as you see with the results now, with the late bookings in Q1 and the slow ramp-up getting out of the gate in Q1, it was part of that cause. So decision makers today are well into the calendar year, and we're seeing a lot more decisions being made. So I think our deal velocity I would tell you starting to pick up in North America. We're setting to make decisions quicker. When you have capacity coming on like we have in New York, in New York 4, and how hot that market is, that's a big help for us to get that going. But I would tell you, from a discipline standpoint, from a commission or incentive, we haven't really done anything else, but we've been completely consumed with getting the Switch and Data sales force integrated. And I would tell you now, that team is, like I said, all the cost take-out is behind them in that function in the company. They are completely focused on cross-selling the Global platform globally and just getting bookings, and pipeline coverage is good. So I like where we are with the North America team. They're doing a very, very good job. Michael McCormack - JP Morgan Chase & Co: Steve, I guess I was just sort of looking at the third quarter cabinet builds coming online and it’s significant numbers. I'm just trying to get a read-through on whether or not that really should be driving some more of the growth.

Yes, Mike, Keith here. I think certainly that will help drive some of the growth particularly as you think about Silicon Valley 5. It's a much needed asset. Or D.C. 6, again, it opened up we've announced that today. That's a very important asset for us. But more so, it’s giving us capacity as we exit 2010 and we look into 2011, but I think it's across the board. I said at least in my piece, I think the trend from a net-billing perspective is going -- you're going to see the same trend in Q3 as you saw in Q2. And the only other thing I’d like to supplement what Steve said, the one area that we had put a little bit of focus on that you probably are aware, and we’ve been quite public about it is our Chicago 3 and our L.A. 4 asset. Our Chicago 3 asset is doing extremely well now. The teams – we are incenting them to sell into that one with a little bit more commission, and they're doing a good job. We're also getting the right customers to go into those right IBXs. So we’re making some good performance -- we're improving in the Chicago 3 and in L.A. 4 we’re starting to get some traction. So overall, I feel really good about where we are and I think you’ll continue to see our billing activity increase.

Our next question comes from Mark Kelleher of Brigantine Advisors.

In the U.S., in your six traditional cities, have you been able to bring Switch and Data assets online to address some of the capacity constraints in those cities? Or is it really two different customers, two different markets and those stay completely separate?

Well there is some overlap, for example, in New York. And with Bergen County's assets, it brings more capacity on obviously in that New York Metro, New York, New Jersey metro. And we'll sell different types of accounts into those two assets. But we're tethering and connecting in the overlap markets where it makes sense. In the Silicon Valley we’re doing the same thing with the PAX assets and with our SB1 asset. In Dallas, we're actually co-located in the Info Mart. And by the end of November, I think we’ll have Dark 5 relayed there and we’ll have complete connectivity. IBX link will be leveraged in other cities. So yes, where we're overlapped in particular, Silicon Valley, New York and Dallas, it's part of the capital plans. It's in motion, and it's part of the plan.

Just to fill that out, Steve, I do think we have different spec sheets. So you can actually get a little bit different flavor. I think we mentioned that on the last call. So if we need a certain type of inventory closer, and I think Bergen or NY 4 are good examples, you can get a different product. And we need to be close to the ecosystem. You have it for certain applications might say it in Burgin. So it really gives us some great flexibility as well in the market.

All right, and could you give us just a quick update on the Ethernet exchange, how that's going?

Yes, just to build on that, I think we had 24 original development partners that were part of our initial launch back in April. They're moving now to commercial agreements. We've now added four additional commercial deals. We just started selling that the last 45 days. We have a great pipeline. So we'll be announcing some momentum on that. I think you'll see some appreciable folks are still just putting the initial traffic in the test, and you'll see that ramp-up over the course of the year as we are building an ecosystem from the bottom up. And again we’re targeting folks. We know who they are who already provide Ethernet services into our customers of ours. So we're building out this momentum now globally.

Our next question comes from David Barden of Bank of America.

I just want to talk about the guidance just real quick. If I take a full year guidance and I back out your third quarter midpoint 2Q, 1Q, it looks like you got into about $151 million of EBITDA for the fourth quarter and that’s a $13 million sequential increase quarter-to-quarter. And if that maintained all the way through 2011, we’d be looking at a $730 million 2011 EBITDA number. Right now, street consensus is about $660 million. That implies a $6 million sequential EBITDA growth number next year. I know there was a question earlier about balancing growth in CapEx, but could you talk a little bit about the differences between growing $13 million sequential EBITDA in the fourth quarter and any reasons why it would slow all the way down maybe to $6 million a quarter for all the quarters in next year?

It’s a very good question, David. First and foremost, I think as you look through the guidance we offered for 2010, clearly there's some timing. So when you look at the seasonal impact par coming into our Q3 numbers, that relieves itself in Q4 and so you get the benefit of that. But also our spending, we know exactly what we're spending on. And so we ebb and flow a little bit. Our timing has been a little off this year in the quarters and how we were spending our dollars and so we’ve got a little bit more spending in Q3 than we would have in Q4. But when you look at actually the exit rate, I mean when you do the math, you can see that we're exiting at a very high rate of EBITDA in 2010 as we look into 2011. So I’m not going to tell you what the number is for 2011 that we are thinking about right now. But certainly, as you get a good sense of acceleration that we see as a company exiting 2010 into 2011. And I think it positions us very well from a margin perspective.

I appreciate that. On the Switch and Data merger, you guys have focused a lot on the cost synergies. There wasn't really a lot of talk about revenue synergies at the time. I was wondering if you guys could maybe elaborate a little bit on if you’ve see any cross-selling opportunity from one sales force to the other base and vice versa. And if there’s something incremental that could be extracted from that aspect of the merger?

As I mentioned earlier, David, we are completely focused now on the revenue synergies in terms of the sales force. So in terms of quantifying revenue synergies right now, way too early. We do have cross deal flow in the pipeline. We've got deal flow from Switch and Data’s customers now looking into Asia and Europe. We've got the sales force is cross-selling into both assets. They're all part of one team today, the organization is completely finished in sales. So the structure all the way up to the sales leader in North America has been in place for weeks now. So I would tell you that it's all hands down right now to get absolutely focused on these 50 whatever four or five assets we have in the North America region with the combined sales force. So generally, we’re, call it almost 2x feet on the Street in North America now with the combined Switch and Data and the growth of the organic Equinix sales force. So we have high expectations of this team to continue to sell into all the assets and we’ll expect that we’ll start to attack that utilization level that we picked up with Switch and Data.

Our next question comes from Michael Bowen of Guggenheim Securities.

I guess I wanted to hit a little bit of the third quarter versus 4Q issue again. Because, like David, I'm going through the numbers, and I think you said in the third quarter, there's a $4 million FX impact, and I think you said that was revenue. So assuming EBITDA is somewhere near half of that, I'm still a little confused as to what's driving the, not much of a step up in adjusted EBITDA for third quarter. But then a pretty big increase in the fourth quarter. So I want you to drill down into that a little bit more for me if you could. Also in the U.S., one of your competitors has talked about renewal business contracts having quite a bit of pressure with regard to pricing and margins. I wanted to find out if you guys can give us an idea of how much of your U.S. business right now are renewal, how much might be coming up for renewal versus brand-new contracts?

Okay let me take the first two questions and Steve will take the last one on renewals. I think it’s important to know when I talked about the $4 million, I was talking about for the entire year. With the new guidance that we have in place with the current exchange rates I offered today, it has an impact of taking our total year revenues down $4 million. So I wanted to be clear on that. So the real issue when we talk about EBITDA which is, of course, you know where our revenues are going to go, we've given you Q3, we’ve given you total year so you know where Q4’s going to be. It then comes into the costing model. What's real important here is Q3 historically, and from a seasonal perspective, we pay higher rates per kilowatt hour for power and power’s a very big component of our cost structure. We pay more in Q3 than any other quarter. Our power costs are going to go up roughly $5 million quarter-over-quarter because of rates based on what we're seeing today. A lot of that almost gets fully abated in Q4. And because of that, you get the anomalies of what goes on in your exit rate versus Q3, and that's probably the largest piece. In addition, there's some discrete costs that we’re spending money on at the corporate level in Q3 that we don't think will be there in Q4. And for those reasons, that's why you get basically a fairly large step up from Q3 to Q4.

On the second part of that question, Michael, I would tell you that I don't have a percentage for you on what percent of our business is going through renewals second half of the year or what we've been through the first half of the year. But we are renewing, with two- to three-year contracts, you can imagine how much renewal activity we’re doing quarterly. But in certain deals where there’s pricing pressure on renewals to move to cheaper colo or wholesale colo for certain applications, that’s going on, has been going on for a long time. For our core business, for the key applications that need to stay around the network density, a different issue. I think it’s steady as she goes. But certainly, tied up within the churn percentages that Keith talked about, we've got constant renewal discussions going on and pricing pressure in certain places where mature customers tend to figure out that they can keep key stuff with us or other retail folks, where they have mission-critical or network-dense applications. And if it's not, they can move it to a wholesale or cheaper colo. But again that's been going on for years and years and years and it's all tied up into this 2% average quarterly churn we talk about and there's no real change in that venue, if you will.

Just very quickly also on the European revenue per cabi, obviously it was the only area that was weak, North America and Asia-Pacific being strong sequentially. I'm sorry if I missed it, but can you tell us or repeat what you said about where you think that might be going? What caused the sequential reduction there in the MRR?

Yes, there's two things. The currency, obviously currency dropped dramatically. And then, of course, we're taking local currencies, and we're converting it into U.S. dollars. So that's the first piece. And then secondly, the back end influence of our large installations. And so, the timing effect in the quarter. I want you to walk away from a unit local-currency perspective, unit pricing is firm. There's nothing that’s really happening. In fact, what we're doing is we’re selling more interconnection in that market. And that's a trend that we would expect to continue, which should over the short- to medium-term increase our price points.

Fortunately in June and July the euro’s doing better. So that should help as well.

You got to look at apertures. And then we don't report on a spot from a penal perspective.

Our next question comes from Jonathan Schildkraut of Ever Court. Jonathan Schildkraut - Jefferies & Company, Inc.: Steve, you highlighted during your comments that, at certain deal sizes in terms of megawatts that it was a more competitive landscape, and sometimes you were walking away from those transactions. And what we see when we kind of analyze kind of retail to wholesale or retail to the sweet space businesses, kind of that half a megawatt as a breakpoint between the costs inside a more, let’s call it managed data center and one which is truly a sweets business. But from our perspective, when we look at the success factors in that sweet space business, it includes scale, cost of capital, relationships, all the things that Equinix has. Ultimately, it would seem that you guys would be in a fairly good position to move into that market given your relationships and again scale and cost of capital. And the margins in that business from the competitors that are out there are also quite good relative to yours. Is that something that you would look at or consider?

Well, I think your assumption, Jonathan, about the size of the deal is kind of where we've operated, historically. And as I mentioned on a previous question, we are starting to see, and I would think it's from a combination of the private equity that's coming into the space that's building more wholesale-like data center space or acquiring it, it’s putting a little more pressure on the rates and on the wholesale players. So we see in some deals, we see them coming down into the 250, 300 KW range, below that half a megawatt range. So I wouldn't say it's a cross-the-board trend, but we're starting to see them dip into little bit smaller deals. So yes, there’s pricing pressure there, and yes, lots of times we walk away with it. If it's a strategic customer, we might get a little more aggressive. Are we thinking about figuring how to get into that space today? No, we don't really need to. We've got capacity today, and with our strategic customers, we can accommodate that the way we run the business today. So we're very comfortable today with staying focused on these ecosystems and continuing to grow them and occasionally do an anchor, anchor-like deal and then on strategic deals where we want to try to maintain it, we’ve got the capacity to do that, and I think Keith colored a couple of markets where we have the ability to do that.

Our final question comes from Simon Flannery of Morgan Stanley.

I guess the question is, you mentioned that, I think, 29 of the 34 sites for Switch and Data were seeing new orders. For those five sites that didn't see any new orders, I guess what's sort of the plan there to restart that or would you consider anything strategic for those assets?

Simon, very low available capacity, and if you were to look at the specific sites, and I think if you were to go back in history and talk to the Switch and Data team, you'd see that there was not a lot of activity on these sites historically either. But we're looking at all 34. The new integrated sales team is going to look at capacity across every market, and you guys should expect that as we have in our own six core markets, we'll now have the same discipline going after all 34 of these data centers and 22 markets, I should say, in North America. But it's just a rounding error when you’re talking about the five that we didn’t sell anything into.

Okay, thanks, Steve. And I forgot to say this is Edward Katz calling for Simon.

This concludes our conference call today. Thanks for joining us.