The 1Q19 WNO Market Review analyzes the network infrastructure spending and financial position of webscale network operators (WNOs).
WNOs are web-centric companies whose operations and services rely heavily on hyperscale data centres and supporting connectivity. They typically have tens or hundreds of millions of customers/users and rely heavily on the scale and network effects in the quest for profitable growth. Most WNOs build and operate data centres, but some rely largely on rented/leased resources. Netflix, Snap and Twitter are notable examples. Each of these spends heavily on cloud resources from other providers and is a candidate to build organically in the future. Or, purchase existing assets during a market adjustment.
- Global coverage with company-level drilldowns of 31 companies
- Company-level annualized and quarterly trends across 29 financial data series
- Network-related spending estimates at the market- and company-level, across quarters
After spending big in 2018, global technology companies continued to expand their webscale networks in 1Q19, investing over $110B in CAPEX over the last 12 months.
Webscale networks are mostly centred around immense, hyperscale data centres and undersea cable systems that support network traffic from the tech companies' online retail, video, and social media platforms, along with cloud services. Not just that, some tech-bigwigs including Amazon, Facebook, Alphabet, and Microsoft are now looking to conquer another frontier - outer space - for providing connectivity to the underserved and unserved markets.
After surpassing $100B in CAPEX for the first time in a single year in 2018, the companies in this webscale network operator (WNO) sector invested $110.6B in the twelve-month ending 1Q19, up by a robust 22.7% YoY. This surge impacted the sector's cash & short-term investments which fell by 3.0% YoY during the same period. Free cash flow margins, however, saw no impact as they witnessed a mild uptick in 1Q19 compared to the previous quarter, on an annualized basis. The CAPEX hike was primarily led by the Top 8 webscale companies composed of eight leading technology firms - Alibaba, Alphabet, Amazon, Apple, Baidu, Facebook, Microsoft, and Tencent.
Webscale operators continue to branch into new markets, including hardware, both through R&D and acquisitions. M&A activity in the sector remained vigorous in 2018, with Alphabet, Amazon, Microsoft, Oracle, and Salesforce each recording sizable related costs. The M&A climate remains strong for the sector given its high cash reserves. Total debt for the sector is manageable overall, at $446.1B in March 2019, or $186.1B less than cash & stocks. Some individual companies could face debt issues in an economic downturn, however, or due to regulatory pressure.
Key Topics Covered:
3. WNO Market: Key Stats thru 1Q19
4. Top 8 WNOs
5. All WNOs: Company Drilldowns
6. Totals by Company
- Booking Holdings (formerly Priceline)
- Qihoo 360
For more information about this report visit https://www.researchandmarkets.com/r/2khrpk