Hindenburg Research, an investment data research company that focuses on reporting negative news, released a report on Equinix, a major data center provider, stating that the company’s financial numbers show inflated profits, causing its valuation to be up to 86% higher than similar companies.
The report alleges that Equinix classified maintenance CapEx as growth CapEx, causing operational profits to appear lower than they actually are. This accounting practice has been in place since 2015, leading to a decrease in repair costs by up to 47%.
In some cases, the report claims that department heads were pressured to request equipment with different serial numbers when sending them for repairs to account for them as new devices. Even battery backup replacements were labeled as system upgrades rather than simply changing the battery cells. The report even mentions the accounting of light bulb replacements as upgrades.
Following the release of this report, Equinix stated that their audit committee is currently investigating the allegations and will cooperate with legal authorities in the ongoing investigation.
Equinix has significantly expanded its operations in recent years, serving customers ranging from corporations to major cloud service providers. A recent incident at one of the company’s data centers in Singapore caused a major bank’s system to crash.
Source: Hindenburg Research
TLDR: Hindenburg Research’s report accuses Equinix of inflating profits and misclassifying expenses, leading to a higher valuation than justified. Equinix is under investigation for these allegations.
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