LocalTechWire

Executive Q&A

1. What trends are you seeing among new customers and prospective customers in terms of demands and needs?

   We are seeing several trends but four come to mind.

   Existing customers continue to show increased demand for added services and expansion of existing services.

   Prospective customers are looking to us for more managed services including fully managed, end-to-end services. In addition, having alternative data centers and network access points throughout the Southeast continues to be a positive in the eyes of our prospects.
   Both existing and prospective customers and especially the small to medium enterprise customers, where much of our growth is occurring, have more interest in security and business continuity solutions as well as the flexibility we offer from basic collocation to fully managed service options.
   

   Companies are under increased pressure to comply with HIPAA, Sarbanes-Oxley and other government regulations. They are looking to outsource to improve service levels and/or save money and insure compliance.

2. What do you see on the horizon as future needs?

   We see the ability to add more services to our existing portfolio as driven by customer demand as a specific strength of our company. For example we will deliver new security offerings that are targeted to mid-market businesses in 2004 as well as offer more robust network access solutions to push more services including back-up, replication and exchange management closer to our customers.

   We look to 2004 with a great deal of anticipation, but fully expect our growth to be consistent with the economic growth in the markets we serve. Our business has long been one of steady, manageable growth.

3. Is Sarbanes-Oxley a driver in customer interest in remote data?

   Yes, regulations like Sarbanes-Oxley and HIPAA are forcing organizations to insure data integrity, security and availability.

4. What are the primary drivers for the growth in the storage and data management sector?

   The primary drivers are and will continue to be security, data protection (data backup and replication) and government regulation. However, we are seeing a trend towards the need for scaleable solutions for data storage. Organizations are growing more sophisticated in how they use customer data and are deploying technology applications to create large data warehouses. Outsourcing the management of these applications makes sense and we see this as an area of future growth.
   

5. What are the drivers for growth at Peak 10 in what is a competitive business?

   We operate with a sound financial plan. We understand that our customers are adverse to risk and to that end our business is based on the employment of a scalable model and prudent financial operations. We deploy our capital in a very conservative manner and expect our customers’ success to be based on the same principles. We need to execute at a local level and our management team, top to bottom, must remain committed and involved in the markets we serve to communicate that we are in this business for the long term. Finally we need to continue to live up to our reputation for being a stable service provider that understands its customers’ needs and delivers a high level of value.

6. Can you tell me where you stand on opening a fifth location?

   We continue to evaluate opportunities and have meaningful discussion around adding a fifth market.

7. You said at the event that the Charlotte facility is now at 40 percent capacity. Do you want to disclose that publicly?

   This is not public information. Do not disclose.
   

   A better question would read:

   You said at the event that the Charlotte facility was doing well. Can you expand?

   The Charlotte data center is cash flow positive and has been for the past twelve months. This clearly indicates how our model plays out: Our centers are able to reach positive cash flow early on in terms of capacity and clearly upgrade and expand the capabilities of the center with this success based approach.

8. Please explain why you chose to go with the bio security sensor system?

   Physical security is very serious business to Peak 10. We chose a biometric security sensor system as one of six layers of security required to access our data centers. As with any security system it is the combination of steps that is essential to retard unauthorized intrusion. The biometric system is important but is one aspect of a more comprehensive security plan.

9. What are the advantages of having the access facility just outside the main data center? (I can't remember the specific term for it.)

   The customer vestibule is a space provided for our customer technicians or other personnel, who have access to the facility, to work from a workstation, make business calls and in essence have a work area away from their offices for planning during their session at the data center. This feature is available in all of our data centers as well as access to a conference room when scheduled with local management.

10. What has the growth rate been this year in terms of customer count and revenue?

    We are countering recent downsizing trends in our industry by expanding operations. Year to date, we have increased revenue by 49 percent and have seen our customer base grow by 55 percent in that same time period.

11. I assume you can't identify the major client that dominates the first floor other than a "financial institution"?

    To do so would violate our security policy and commitment to that customer.

12. I asked Dave Murray sometime back about a report that Peak 10 had raised
    $1.5M in venture capital. Care to comment on that?

    We have raised more than $20 million in venture capital.
    

13. How is Peak 10 performing in all of its markets?

    All markets are on plan. In our original centers, Jacksonville and Charlotte, we have reached profitability. Our newer centers in Raleigh and Tampa are on track and adding new customers at a nice rate. In general, we are seeing increased demand in all markets.

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