Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

21Vianet Group, Inc. (NASDAQ:VNET)

Q4 2012 Earnings Conference Call

March 6, 2013 08:00 ET

Executives

Josh Chen - Co-Founder, Chairman and Chief Executive Officer

Jun Zhang - Chief Operating Officer

Shang Hsiao - President and Chief Financial Officer

Analysts

Chris Larsen - Piper Jaffray

Chad Bartley - Pacific Crest

Eric Chu - Canaccord

Gary Yu - Morgan Stanley

Louis DiPalma - William Blair

Operator

Good morning ladies and gentlemen. Thank you everyone and welcome to 21Vianet Group’s Fourth Quarter and Full Year 2012 Earnings Conference Call. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference call. Before we begin I will read the forward-looking statements. This call may contain forward-looking statements made pursuant to the Safe Harbor provisions for the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company’s control which may cause actual results, performance, or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors and details of the company’s filings with the SEC. 21Vianet undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call.

With us today are Josh Chen, 21Vianet’s Co-Founder, Chairman and CEO; Jun Zhang, our Chief Operating Officer; and Mr. Shang Hsiao, President and CFO of 21Vianet. Following management’s prepared remarks we will conduct the Q&A.

At this time I’d now like to turn the conference call over to Josh Chen, 21Vianet’s Co-Founder, Chairman and CEO. Thank you. Please go ahead.

Josh Chen - Co-Founder, Chairman and Chief Executive Officer

Thank you, operator. Good morning and good evening everyone and welcome to 21Vianet’s fourth quarter and full year 2012 earnings conference call. We are extremely pleased with our achievements for 2012, which prove to be a key year for 21Vianet fiscal – we significantly expanded the scale of our business delivering growth of almost 50% in revenue which increasing our higher margin self-built cabinet counted by over 82% during the year.

Most strategically we took multiple step towards the diversification and expansion of our Internet and the cloud infrastructure service offering through acquisitions and the strategic partnership with - this year in particular we believe that our partnership with Microsoft to operate and offer Office 365 and Windows Azure Service in China this year will provide us with incremental growth potential as well as an opportunity to further broaden our customer and revenue base in 2013. This partnership together with the addition of Fastweb demonstrates our company’s accelerated efforts to bolster our cloud and software capacities and to improve the quality and reliability of our service.

In attempt to sparing ground-up for the market shrink of Chinese companies and government agencies increasingly migrating their business functions into the cloud. Looking forward we are excited about the growth opportunities for 2013. At the beginning of this year we have begun construction of what we are the one of the largest data centers in China with that this additional capacity will enable us to keep up with the strong demand for our cloud hosting and managed network service. We believe that these efforts have better positioned us to take advantage of the growth trends taken place for Internet and cloud infrastructure service, further strengthening our position as a leading Internet infrastructure provider in Greater China.

With that I would now turn the call over to COO, Jun Zhang for an operational update.

Jun Zhang - Chief Operating Officer

Thank you, Josh, and good morning and good evening everyone. Over the course of 2012 we continue to pursue a structural safe throughout higher margin self-built cabinet. We are very pleased that we have accelerated, listed for last year, by expanding our total self-built cabinet count to more than 62% of our overall cabinet under management, up from 52% at the end of 2011.

Moreover since our new mega data center in Beijing we ultimately had the capacity to host over 5,000 cabinets. We are pleased to reveal our targeted mix of self-built and partnered cabinet to 80:20 over the long-term from our original goal of 65 to 35. As our wholly owned are more profitable and reliable as compared to partnered cabinet and that we can also – we can also more easily cross-sell there is no services like the CDN services, we are very confident rather this initiative as part of our long term growth strategy will enhance our ability to realize further margins and the earnings upside, while providing us with additional flexibility and the leverage in ruling of our cloud service offering.

In addition to our call Vianet expansion we are delighted to see that the integration of Fastweb as started to bear fruit. Although it’s a small acquisition by absolute amount, it has made a tangible contribution to our revenue growth as well as customer expansion. From a mostly strategic point of view, the integration of Fastweb has provided a set of cloud enabling technology solutions adding another layoff services we can offer clients as we work to launch our product offering later this year.

As announced last quarter, we made a significant upgrade to our fiber platform, during the first quarter. Although, we experienced some temporary additional disruptions to our Vianet expansion effort, we are very confident that this upgrade which was completed in January will significantly improve the transmission capacity and the liability of our services. This capacity expansion coupled with our continued deployment of new cabinet will help further elevate the capacity constraint, the experience in 2012, providing us with a creative long-term benefit.

At this time, I would like to turn the call over to Mr. Shang Hsiao, our President and CFO, who will discuss our financial performance as well as financial forecast for our recent initiative in greater detail.

Shang Hsiao - President and Chief Financial Officer

Thank you, Jun Zhang and good evening everyone. Before I start going through our financial details, I would like to state that we will present non-GAAP measure on today’s conference call. All non-GAAP result excludes certain non-cash expenses, which are not a part of our core operation. The detail on this expenses maybe found in the reconciliation table included in our earlier release.

Also know that we are – the financial number, we are presenting today are in RMB amount and these are that I have noted. As just discussed earlier, our 2012 result continue to underscore the stability and scalability associated with our business model, more specifically, with our detailed financial results.

Our net revenue for the first quarter of 2012 increased by 31% year-over-year to RMB417.8 million. Our monthly recurring revenue also MRR defined as a revenue recognized as a fixed and recurring basis each month grew to over RMB142.1 million in December from RMB139.2 million in September of 2012.

The MRR per cabinet further increased to RMB10,467 in the first quarter of 2012, from RMB10,027 in the third quarter. Going forward we continue to expect the MRR per cabinet remain about RMB10,000 per cabinet, but it may fluctuate also by quarter.

Our utilization rate was 66.3% in the first quarter of 2012 compared to 67.7% last quarter, reflecting the increased capacity associated with the expansion of new phase at the end of the third quarter as well as the impact from our backbone upgrade in the fourth quarter, which results in a temporary slowdown in our deployment of new cabinet and MNS service.

Net revenue from hosting and related service increased by 45% year-over-year to RMB253.4 million in the fourth quarter of 2012 primarily due to an increase in total cabinet under management in self-built and partnered data center achieved (indiscernible) to growing customer demand.

Net revenue from management network service increased 15% year-over-year to RMB164.4 million in the fourth quarter of 2012. This increase was primarily driven by network capacity demand for data transmission service. The increase in managed and network service revenue was primarily driven by obtaining network capacity growth for data transmission service.

For the fourth quarter of 2012, adjusted gross profit increased by 29% to RMB123.3 million. Adjusted gross profit margin was 29.5% compared with 30.2% in the prior year period. Adjusted operating expenses increased to RMB77.5 million. As a percentage of the net revenue, adjusted operating expenses was 18.5%. More specifically, adjusted sales and marketing expenses increased to RMB28.5 million from RMB25 million in the prior year period primarily due to expansion of our sales and service support team.

Adjusted general and administrative expenses increased to approximately RMB33 million from RMB26.8 million in the prior year period primarily due to an increase in headcount, office rentals and other expansion related expense associated with our company effort to expand the cloud computing service offering.

Adjusted research and development expenses increased to RMB16 million from (RMB9.8) million, which reflected our effort to further strength our research and development capability and expand our cloud computing service offering.

The main difference between adjusted operating expenses and our higher GAAP total operating expenses amount is primarily due to a change in the fair value of contingent purchase consideration payable of RMB40.1 million and share-based compensation expenses of RMB20.8 million. The change in the fair value of contingent purchase consideration payable is resulted from an increase in the present value of estimated cash and share consideration as of December 31, 2012 associated with the company’s acquisition of the Management Network Entity, Gehua and Fastweb.

From a profitability perspective, adjusted EBITDA for the fourth quarter of 2012 increased to RMB78.3 million. Adjusted EBITDA margin for the quarter was 18.7%, compared with 19.2% in the prior year period. Our adjusted net profit for the quarter was RMB39.5 million compared with RMB46.3 million in the prior year period.

Adjusted net profit margin was 9.5%, compared with 14.6% in the prior year period. The decrease in adjusted net profit was primarily due to the three key reasons. One, increase in mobile operating expenses; two the expenses associated with the Microsoft (indiscernible) reduction in the foreign exchange gain.

Adjusted diluted earnings per share for the quarter was RMB0.11, which represents the equivalent of RMB0.66 or US$0.11 per ADS. The diluted share count is based upon the weighted average number of the company ordinary shares. As of December 31, 2012, our cash and cash equivalents and short-term investment were RMB655.0 million, compared to RMB1.3 billion as of December 31, 2011. Account receivable turnover days of days sales outstanding, DSO was 63 days in the fourth quarter of 2012 compared to the 61 days in the third quarter.

Regarding CapEx, in the full year of 2012 we spent approximately RMB583 million CapEx on our infrastructure buildout for 2013 we planned to spend approximately RMB600 million including addition of data center we planned to build in 2013.

Looking at our financial outlook, currently the company expect first quarter of 2013 net revenue to be in the range of RMB430 million to RMB435 million. Adjusted EBITDA is expected to be in the range of RMB80 million to RMB83 million. This forecast reflects the company’s current and preliminary view, which is subject to change.

This concludes our prepared remarks for today. Operator, we are now ready to take some questions. Thank you.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer-session (Operator Instructions) Your first question comes from the line of Chris Larsen from Piper Jaffray. Please ask the question.

Chris Larsen - Piper Jaffray

Hi, and thanks for taking the question. Shang, what if you can talk a little bit about customers potentially building out their own data centers and what that maybe influencing and what you’re seeing on that front? Thanks

Shang Hsiao

Okay, yes Chris. So far to conclude the company knowledge okay for our customer to build data center right now in China one is that Tencent another one is Baidu. Okay, this two internet company actually they’re building their own data center but are based on our discussion with them and they will build their own data center but the number of cabinet they build okay can only set this by some portion of their demand. So at least we understand okay, their major strategy is to continue okay to use okay the data center outsourcing service provider like 21Vianet. By saying that, I also want to clarify. When we say Tencent and Baidu they are our customer. Okay, and is also our understanding we only have like 15% to 20% of their business and their major business, outsourcing business they are doing with China Telecom and Unicom which sure have that like 85% to 80% okay of their outsourcing project. Okay, going forward we see those trends in China for internet to build their own data center but we will say that’s only for those major internet company, but so far based on our conversation and projection with them we will see to continue the demand from those internet company. Thank you, Chris.

Chris Larsen - Piper Jaffray

Thank you.

Operator

Thank you. (Operator Instructions) Your next question comes from the line of Chad Bartley from Pacific Crest. Please ask the question.

Chad Bartley - Pacific Crest

Hi thank you, hoping you can talk a little bit more about the network upgraded and thing like that impacted revenue a bit more than expected in Q4 maybe impacting your Q1 guidance a bit. Can you talk about that going forward and then also on the cabinet expansion side any sort of color or detail you can provide on how we should think about that in Q1 and in 2013 would be helpful?

Josh Chen

Okay thank you Chad. So, first one the network expansion upgrade okay which we started to do that in September last year so Q4 actually is a quarter impact past the most particularly not only impact in the data center our hosting features actually they impact us a lot in our management network service. And now however the network activity and expansion already completed okay in January and now so in January we still get some impact, but going forward okay based on the current expansion acquired and they just sustain as a company of future growth for next couple of years. So that should be a good news for us okay, and that's one.

In turn of the capital expansion the company plan to deploy 8,000 cabinets in the year of 2013 and with the first deployment actually will be in July okay that's our sixth data center and that data center alone right now is we’re planning to deploy around 1600 cabinets and after that we will also deploy the Hangzhou data center that one actually we are working with Alibaba, Taobao and the company over there shall be somewhere around 1400 cabinet.

And when we go to the December and we suppose to deploy somewhere around 3400 cabinet and that 3400 cabinet actually its come out what we mention about the biggest one of the biggest data center in China Daxing data center Daxing actually is also located in Beijing and we’re planning to deploy around 3400 in December but in between okay we will also deploy the Xi'an data center additional 400 cabinets and the management still working two additional site and hopefully we can deploy additional cabinets before the end of 2013.

So all the major deployment of the cabinet where happened in the second half of 2013 okay and but for the first half okay the company we are concentrated okay to save our cabinet Wuhan, Shanghai and Guangzhou and Shenzhen data center because those company actually we have deployed okay, toward the end of the 2012. So we will put some major effort to save those cabinets in the first half of the 2013. Okay. Thank you Chad.

Chad Bartley - Pacific Crest

And then could I ask a follow up question just on the cloud offerings the cloud business particularly the extended offerings later this year can you talk it all about the types of cloud services that you’ll offer or maybe the potential impact to the model thing?

Josh Chen

Okay. But our partnership with the Microsoft okay right now based on the current expectation and forecast okay, we expect we will deploy the Window Azure somewhere around June or July when all the 365 were the officially deployed in September that's the current plan and with the tie of the partner we provide okay. So it seems so Window Azure and Office 365 actually are already available in the market outside of the China. So right now the current plan is whoever okay, the product they are offering outside of China those are product we are also over into the China market.

So for the past couple of quarter the company by initial model actually already are Azure all those expenses which we call investment into this partnership the major investment around the company actually is people and but for the infrastructure also based on our partnership with the Microsoft all the infrastructure right now actually that would be the investment around the Microsoft so a lot of the investment from the partnership, okay now only for 21Vianet and also for the Microsoft Azure both partly already invested a lot of money into this project.

So once we can on schedule to deploy these old service in the Q3 of this year so we have a revenue we generated okay from this partnership and also the – from the market and that sure helping the company bench model like a gross margin, EBITDA margin and also net profit because right now all the expenses have been to grow in the current financial model. We don’t take any depreciation or amortization, we just expense all the investment okay every month every quarter. Okay. So, right now that’s our schedule. Okay, Chad.

Chad Bartley - Pacific Crest

Alright. Thank you, Sheng.

Josh Chen

Thank you.

Operator

Thank you. The next question comes from the line of Eric Chu from Canaccord. Please ask your question.

Eric Chu - Canaccord

Yes Hi, good morning Sheng. First of all I guess the focus on the first quarter guidance a little bit I mean it seems to imply a continued slowdown from the fourth quarter I mean you have added a lot of the built cabinets in the fourth quarter. And given that I just try to understand what are some of the puts and takes and what and maybe you can help us walk through how you come across with the 1Q guidance especially from the hosting side as well as the managed services side.

Josh Chen

Okay. Thank you, Eric. The situation like this actually we complete our network upgrade and expansion actually towards end of the January. So in January okay we still get some impact okay to reduce network issue, okay. And in February okay actually looking better but same time we also keeping Chinese New Year over there, okay. So, we gave the sales people and look after market and because larger impact over there network impact and Chinese New Year impact. So management actually we want to put a guidance over there which the company can achieve okay that’s a purpose, but based on the new company already deployed in Shanghai, Guangzhou and Shenzhen.

And those market actually a little bit weaker okay then the Beijing market because last year you do see the data center we deployed it actually Beijing data center Beijing Yizhuang data center okay and they have a very good sales and high utilization rate. But for the Shanghai, Guangzhou and Shenzhen okay we shall deploy data center like the Beijing data center and their sale actually was weak compared to the Beijing data center and major reason is of course is a network but also I also want to emphasize that Shanghai Guangzhou, Shenzhen they are best internet company located over there compared to internet company located in Beijing. So due to all those regions the management decide to provide a conservative guidance for the Q1. Okay, so that’s rational for the management to do that. Okay, Eric.

Eric Chu - Canaccord

Okay, great. Okay, great. Can I maybe just ask a quick follow-up question there. So if you – how should we be thinking about the trajectory for 2013 as the year move forward?

Josh Chen

Okay. Principles of company we don’t provide annual guidance okay we only provide quarterly guidance and but we say projection our rate I believe at this moment when we look at it we think okay once we towards the end of the year not towards the end of the year actually when we go into the second half of the year okay the company models look stronger than the first half of the year. Okay, right now that’s based on all the information we have not our projection okay second half would be lot stronger than the first half okay but since they changed very, very quickly okay, we hope starting from the Q1 maybe Q2 and with the contribution from the CDN service and also the (indiscernible) and also with the additional deployment of the data center from Beijing, okay, we push our growth okay even faster. Okay, Eric.

Eric Chu - Canaccord

Okay, great. Thanks.

Josh Chen

Thank you.

Operator

Thank you. And the next question comes from the line of Gary Yu from Morgan Stanley. Please ask your question.

Gary Yu - Morgan Stanley

Hi, thank you for the opportunity to ask questions. I have two questions, the first one on CapEx, can you give us some brief breakdown of CapEx spend on cabinet network or CDN in other areas in 2012 and also in particular for 2013? And second question is on margin, Jun you mentioned that the majority of the cloud computing offering course is already occurred in the past few quarters and you don’t expect a further expansion of cabinet in the first half of 2013. Should we start to see margin improvement from second quarter onwards as you start to sell more of the existing cabinets and generate more revenue from that? Thank you.

Josh Chen

Okay. Thank you. Let’s talk about margin, okay, and (indiscernible) that’s your first question. And right now based on the company projection and all the business model okay we are working with our partner, we do expect, we do expect at this moment okay the cloud computing gross margin okay should be higher than our current business. And we also expect cloud computing gross margin from this year where you see 50% okay and we also expect once we generate revenue from the cloud computing and our gross margin were increased even the cloud computing gross - the revenue from the cloud computing is still small compared to our original business, 50% of the gross margin is our expectation, now that’s for the cloud.

For the company overall margin okay particularly the gross margin that also are linked to our utilization rate because when we deploy this we deploy lot of cabinets in a particular quarter, in that particular quarter maybe also in the following quarter when our sale, I’d say we sell 200 of cabinet when we deploy 1000 of cabinet and the depreciation from those 1000 cabinet were hit immediately okay in the - our cost of sale even the company only like they sold 200 cabinet or something like that. So, (indiscernible) but the management continue to push out okay and sell those on cabinet from the Shanghai, Guangzhou and Shenzhen area. Once our utilization rate hit close to 70 or in the low 70 this says our low in the first time of this year then we just see the margin expansion in the first half this year, okay, Gary.

Gary Yu - Morgan Stanley

Okay. Thank you.

Josh Chen

Thank you.

Operator

I think Gary want to ask a question. Please go ahead.

Gary Yu - Morgan Stanley

Sorry, just one more question regarding CapEx breakdown of cabinet expansion and also network capacity.

Josh Chen

Okay, sorry, I missed that. For the CapEx okay in 2012 we spend somewhere around 583 million and again we calculate 14% of that, that’s for the network extension when more than 85%, 86% that’s for the data center construction and that’s for 2012. For 2013 right now the company expects 600 million to build for the CapEx. But the network we expect okay we will spend somewhere around 12% to 13% okay in the network and raised on then okay its all for the data center construction. And in terms of CDN right now we don’t have a plan to increase the CapEx of the CDN service, because of current okay CDN infrastructure okay will allow the Fastweb continue to grow. When their revenue reach certain level, that maybe the time for us to expect their infrastructure, at least within one year, we don’t see that will happen. Okay, Gary.

Gary Yu - Morgan Stanley

Right, and existing CND CapEx per year stands at what amount?

Josh Chen

It is very small amount; we are only talking about less than RMB10 million, a year, so we don’t count at all.

Gary Yu - Morgan Stanley

Okay, thank you.

Josh Chen

Thank you.

Operator

(Operator Instructions) Your next question comes from the line of (indiscernible) from GIC. Please ask your question.

Unidentified Analyst

Hi thanks very much for the call, I just got a couple of questions. Could you talk a little bit about what your competitors does, the telcos and third-party data center appraisers, what are they doing at the moment in terms of expansion and pricing, are you seeing any over supplying any of the major cities were you are operating and are you seeing any one cutting prices aggressively at? Thank you.

Josh Chen

Okay, thank you (indiscernible). Based on the IDC we call right now, the biggest IDC service but either in China actually is China Telecom. They have a 37% market share, then China Unicom has 18% and in 21Vianet we have a 10% of the market share and if you look at our company back to the 2009 is that part, we only have a 5% of the market share. So that’s a market share, and in terms of the demand, I have to say particular in the Tier 1 City the demand remain quite strong and again like particular in Beijing, even for China Telecom, Unicom they have very, very small capacity and also for the 21Vianet, okay. But I say towards the end of last year, we built the Beijing data center. At this moment, I just want you to know even our utilization rate in Beijing data center right now is close to 55%, but that have been all booked, while our Beijing (indiscernible) data center that only took us like four months, okay.

And that data center we built in Beijing, we are only waiting for the customer to, bring into service and we couldn’t announce the interconnectivity then we can charge. And maybe next quarter, we could see while the utilization rate for that newly deployed Beijing data center will reach nearly 90%. Take simple I want to give it to you just let you know the demand particularly around Beijing is very, very strong.

And in terms of the pricing, the company continuing to charge a premium pricing against the China Telecom and Unicom, the premium pricing actually is between 25% to 30%. And if you look at our MRR per cabinet, what I mean how much money we charge to our customer and if you compare Q3 to Q4 actually the average pricing increased nearly 4% just quarter-by-quarter increased 4% already. So, the management remain quite confident, we can continue to charge a premium pricing in the market, in terms of deploying of the number of the cabinet in China right now, I have to say 21Vianet is one of the most aggressive player to deploy number of the cabinet in the year 2013.

But you can calculate nearly like a 70%, the number of cabinet will be deployed by 21Vianet actually will be located in Beijing, and where the price is higher most Internet company located in Beijing and there we’re very, very competitive against the China Telecom and Unicom data center service. So, that’s the situation. You may hear following the news okay that China Telecom and Unicom they are building the big data center but those big data center right now are mainly for the cloud computing service okay. They are building in the remote area of China not like we’re building the data center in Beijing, Guangzhou, Shanghai and Guangzhou since that’s all inter major city in China, Tier 1 city. So, the company will continue to be very, very focused on hosting service and building the new cabinet can be reached be our major customer okay so that’s our plan.

Unidentified Analyst

Okay, thank you.

Josh Chen

Thank you very much.

Operator

Thank you. Next question comes from the line of Louis DiPalma from William Blair. Please ask the question.

Louis DiPalma - William Blair

Thanks. This is Louis DiPalma on behalf of Jim Breen. Thank you. My question is on the previous call you targeted US$17 million to US$19 million for the Microsoft deployment are you reaffirming that guidance?

Shang Hsiao

Okay. Yes, okay just based on our forecast okay that you can say that is final and right now the company has not changed that. So, we expect even with the third quarter deployment okay of our cloud computing service with the Microsoft. We expect only for the six months the company can generate US$70 million to US$19 million okay the cloud computing service revenue but that’s our current guidance yes.

Louis DiPalma - William Blair

And is that the forecast that Microsoft already booked that revenue or there do you have contracts on enterprise customers till it happens Microsoft Azure services and Office 365?

Josh Chen

Okay. Right now, well we understand because as you know all - based on the partnership all the contract supposed to be signed by the 21Vianet okay since service have not been deployed so we’ve not signed any contracts at this moment. And but I just wanted to give you a indication that we do have many customer, well potential customer, new customer they are waiting on the line trying to get Windows Azure and Office 365 in China. So, for now okay people are waiting, the customer they are waiting okay. So, we do have a waiting list okay.

Louis DiPalma - William Blair

And my last question is of the total cabinets that you’re building out in 2013 how many of those cabinets are you deploying Microsoft server (brand)?

Josh Chen

Okay. For the cabinet okay because the cabinet, for the cloud computing service okay so the server actually will be purchased by the Microsoft. So, when Microsoft putting their server in our data center and we’ll charge for that okay. We’ll treat that like our normal hosting customer like IBM and HP, Google they are also our customer so we’ll charge them okay and those revenue actually we won’t count that as a cloud computing service okay. We’ll just count okay, those revenue okay as our regular hosting revenue okay.

And in terms of how many cabinets we build for the Microsoft that’s confidential. At this moment, I cannot disclose on that okay because the cabinet we’re building is very special with some very high power density. It’s a little bit different than our normal routine cabinet okay very high power density. So, we’re building that and particularly we mentioned (that also) any six data center okay and so talking about the cabinet, we’ll support this partnership okay.

Louis DiPalma - William Blair

So just to clarify there I think you said that you’re adding 1600 cabinets and six data center in July, are some of those cabinets Microsoft’s cabinets?

Josh Chen

Yes, may at this moment I can say may okay, because those number sof the cabinet okay approached me to do the testing first. Okay, so at this moment I say our goal is in the future (M6) data center can support the partnership okay for the cloud infrastructure.

Louis DiPalma - William Blair

Great, that’s very helpful. Thank you very much.

Josh Chen

Thank you, Louis.

Operator

Thank you. (Operator Instructions) Thank you as there are no further questions at this time I would now like to hand the conference back to Mr. Shang Hsiao, President and CFO of 21Vianet for closing remarks.

Shang Hsiao - President and Chief Financial Officer

Thank you everyone for your time to join in our conference call. Thank you very much okay you can have a good day. Thank you. Bye-bye.

Operator

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: 21Vianet Group's CEO Discusses Q4 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts