China's 21Vianet Still Has Potential

| About: 21Vianet Group (VNET)
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IPOdesktop’s IPO pick of the week 21Vianet (NASDAQ:VNET) is up 42% from the IPO price of $15.

SUMMARY – AT $21.01, 21Vianet’s market capitalization is $1.1 billion, up 92% from a price range mid-point valuation of $575 million at $11 two days before the IPO. VNET has potential upside, although it's probably not a good idea to jump in today.

Quarterly revenues grew sequentially each of the last eight quarters. S-1 page 80. December quarter revenues skyrocketed 62% above the September 2010 quarter. Revenues are recurring. The December quarter showed a loss because of non-cash shareholder expenses

CLOUD COMPUTING -- VNET believes that "the scale of our data center and networking assets uniquely positions us to capture opportunities and become a leader in the rapidly emerging market for cloud computing infrastructure services in China." S-1 page 59

RIGHT PLACE, RIGHT TIME -- "China will soon be the largest PC market in the world," according to Stuart McKee, national technology officer in Microsoft's public sector. Computerworld, April 19, 2011

VALUATION – annualizing December quarter’s revenue the price-to sales multiple is 9.2, which is reasonable given that VNET is the leading independent data center company in China

VNET FACILITATES CLOUD COMPUTING -- "The global market for "cloud computing" — that fluffy word for services delivered over the Internet — is going to increase from about $41 billion in 2011 to $241 billion in 2020, according to new estimates from research firm Forrester." Wall Street Journal April 21

CLOUDS CAN CRASH – Amazon’s (NASDAQ:AMZN) cloud crash takes down Foursquare, Reddit and others. VentureBeat April 21

Infrastructure a Bigger Business than Platform "as a service," Forrester Research Predicts Infotech April 21

"The problem is that everyone seems to have a different definition." Infoworld

"Software-as-a-Service is merely a consumer of cloud computing." InfoQ

"What's the Difference Between Cloud Computing and SaaS?" CloudComputing Journal

"The lines between cloud computing models are blurring"

"SaaS solutions offer more security and soft savings than once thought"

"The Cloud Solution That Actually Is A Solution, whether in a private cloud, public cloud, or Software-as-a-Service (SaaS) environment" Microsoft

Wikipedia -- Cloud computing

Wikipedia -- Software as a Service (SaaS)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.