3/29/2010

TONIGHT'S AGENDA

Portfolio Update Market Movers: Obama & Greece Buy Equinix Incorporated Sell USG Corporation

PORTFOLIO UPDATEAnthony Vitiello

RECENT TRANSACTIONS Sell 200 Shares of RIMM @ $74.32 on 3/23/2010

ALL-STARS

8.64%

3.87%

3.37%

3.61%

2.84%

DOGS

5.96%

2.83%

1.52%

0.75%

1.12%

LARGEST HOLDINGS USG Corporation:

5.24% Winn Dixie Stores:

5.23% jetBlue Corporation:

4.91% Waters Corporation

4.65% KBR Inc.

4.64%

BCIC RELATIVE HOLDINGS

Sector BCIC S&P 500 Relative Weight

Business Services 16.34% 3.85% 12.4900%

Consumer Goods 15.23% 10.89% 4.3400%

Healthcare 13.68% 11.88% 1.8000%

Industrial Materials 11.57% 10.73% 0.8400%

Consumer Services 9.09% 8.66% 0.4300%

Information 4.95% 4.78% 0.1700%

Telecommunication 4.45% 5.82% -1.3700%

Energy 9.37% 11.55% -2.1800%

Media 0.00% 2.58% -2.5800%

Utilities 0.00% 3.63% -3.6300%

Financial Services 10.37% 14.37% -4.0000%

Hardware 4.93% 11.25% -6.3200%

AgendaAgenda1. Growth

• Revenues and Margins

• Acquisitions

2. International Growth

• Current Strengths

• New Initiative

3. Cash Flows

• Capital Expenditures

4. Sustainability

5. Plan of Action 10

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Revenue and Margin Growth 2004-Revenue and Margin Growth 2004-20092009

Forecasted Revenue Growth 2010-Forecasted Revenue Growth 2010-20142014

12

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2005 - Los Angeles data center originally built for Exodus Communications

$34.5 million2007 – IXEurope- Dusseldorf, Frankfurt, Geneva, London, Munich, Paris and

Zurich $550 million plus debt assumption2008 – Virtu

- Enschede, Zwolle, and Amsterdam $48 million plus debt assumption2010 – Switch and Data

- Various Tier I & II North American locations $689 million plus debt assumption2010 - Shanghai Data Solution partnership

Acquisitions and PartnershipsAcquisitions and Partnerships

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International GrowthInternational GrowthEmerging Markets• Bring brand, customers, and expertise to

existing datacenter and colocation providers• Adjust demand forecasts and plan for

enhanced partnership or data center construction

• Maintain similar margins as through existing operations in the region

Leverage International Footprint• Continue trend of increasing cross-border

deals (more than 50 in Q4 2009 alone, up from 35-45)

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Intensified Global Marketing Intensified Global Marketing ApproachApproachExpand Size of Marketing Department

• Currently nearly $1 billion revenues managed by less than 75 marketing agents

• Hiring throughout 2010 will begin new marketers’ six to nine month training window

Refined Focus on Verticals• Hires will be experts in Networking, Financial

Services, and Enterprise Technology• Focus on verticals and targeting of momentous

customer deals rather than limiting marketing staff by geographic scope

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2004 2005 2006 2007 2008 2009Net Income (68.6) (42.6) (6.4) (5.2) 131.5 69.4D & A 66.1 75.0 72.8 103.3 158.9 173.5Other 39.4 35.3 9.0 21.9 (22.9) 112.5

Net Cash 36.9 67.6 75.4 120.0 267.6 355.5

Cash Flows From OperationsCash Flows From Operations

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2004 2005 2006 2007 2008 2009Cap Ex (22.9) (45.4)(162.3)(537.3)(471.1)(369.5)Purchase of Other Businesses

-- -- -- -- (23.2) (28.2)

Other (33.9) (63.3) 3.8(517.4) 16.3(160.5)

Net Cash Flow (56.9)(108.7)(158.5) (1054.7)(478.0)(558.2)

Cash Flows From InvestmentsCash Flows From Investments

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Elaboration on Cash & Cap ExElaboration on Cash & Cap Ex2010 Guidance (in millions)

Long Term Ongoing Cap Ex⇒ Expected to be 5% of revenues

Revenues (24% Growth) $1,050,000 to $1,075,000Cash Gross Margin 64%Cash SG&A $200 to $220Adjusted EBITDA $460 to $480Cap Ex $400 to $500 Expansion Portion $300 to $400 Ongoing Portion $100 Maintenance $15 Customer Installations $40 Corporate IT Systems,

New Product$45

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Estimated Useful Life

Computer equipment and software 2 to 5

Furniture and fixtures 2 to 10

IBX equipment 2 to 15

IBX plant and machinery 2 to 25

Leasehold improvements 10 to 20

Site improvements 10 to 15

Buildings 30 to 50

Accounting Depreciable LivesAccounting Depreciable Lives

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Sustainable MarginsSustainable MarginsPricing Pressure from Competition• Pricing has remained firm across products and

cost drivers in the U.S.• Willing to negotiate lower margins for longer

contract durations with high-gravity customers

• Q4 2009 = 10 year contract with Fortune 100 customer

Existing Customer Base and Global Footprint• Interconnection services are still unmatched,

and any successful competitor will need time to build network effects

• Targeted marketing effort should make interconnection ecosystem even more attractive

Competitive LandscapeCompetitive Landscape

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Internet Data Centers•AT&T, Level 3, NTT

Network Access Points•Switch and Data, TelecityGroup

Vertically Integrated Web Hosting•Verizon Business, Vericenter

Real Estate Investment Trusts•Digital Realty Trust

Private data centers•Google and Microsoft, Rackspace

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Potential HazardsPotential Hazards• Dilution (Convertible debt and employee options)• New Competition and Pricing Pressure• DoJ proceedings for SDXC acquisition• Financial regulations and High Frequency Trading

limitations

• Market and sector risk exposure• Cash flows must improve as expected• Will bond issue pay off?

Proposed Plan of ActionProposed Plan of Action

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1. Purchase 135 shares of EQIX for around $13,000

2. Keep an eye on trends in the market, competitors, and the performance of EQIX

3. Be prepared to exit within a one year window if vital signs are troubled or new concerns arise

4. Expected investment horizon is longer term, perhaps 3 to 5 years

As Jim Cramer would say:

“It’s not Buy and Hold, It’s Buy and Homework.”

BACKGROUND Second Largest BCIC Position

$15,400 (5.28% of Portfolio)

Building Materials Company Wallboard & Related Products Ceilings for Commercial Construction Distribution Yards

SELL THESIS Macro Headwinds Remain in Housing

Interest Rate, Unemployment Uncertainty Industry Supply Overhang

Low Utilization, Pricing Below Cash Costs Stock is +50% Since February Lows

Levered Bet on Recovery

HOUSING HEADWINDS Housing Has Been Supported by Fiscal and

Monetary Policy These are Currently Winding Down Only Supported, Not Strengthened, Market

USG Makes Money from New Home Construction Yet Problems with Existing Housing Stocks are Numerous

INDUSTRY PROBLEMS USG and Competitors (Mostly Private) Greatly

Expanded During Boom Phase Overhang of Capacity Reduces Pricing Power

Currently Below Avg. Cash Cost

Plants Have Been Mothballed, Not Closed No Bankruptcies

ATTRACTIVE EXIT POINT Stock is Up 50% from Market Lows in Feb.

“Sell the Rips” Valuation Not Compelling Wallboard Price Increases Not Sticking Deteriorating Balance Sheet & Dilution

ANNOUNCEMENTS & HOUSEKEEPING

Market Game– Keep Trading!!! Tee Shirt Ideas– Email

vitiella@bc.edu