OPERATING SEGMENTS

3 Months Ended

Mar. 31, 2012

OPERATING SEGMENTS

2.           OPERATING SEGMENTS

We operate in two business segments: data center services and IP services. The data center services segment includes colocation services, which involves providing physical space within our data centers, as well as associated services such as power, interconnection, environmental controls and security. The segment also includes hosting and cloud services in which customers own and manage their software applications and content, while we provide and maintain the hardware, operating system, data center infrastructure and interconnection. The IP services segment includes our patented Performance IP™ service, XIP™ Acceleration-as-a-Service solution, CDN services and flow control platform (“FCP”) products.

The following table shows operating results for our business segments, along with reconciliations from segment profit to income (loss) before income taxes and equity in (earnings) of equity-method investment:

	Three Months Ended March 31,
	2012		2011
Revenues:
Data center services	$	39,938	$	31,542
IP services		27,090		27,862
Total revenues		67,028		59,404
Direct costs of network, sales and services, exclusive of depreciation and amortization:
Data center services		20,970		18,530
IP services		10,184		10,500
Total direct costs of network, sales and services, exclusive of depreciation and amortization		31,154		29,030
Segment profit:
Data center services		18,968		13,012
IP services		16,906		17,362
Total segment profit		35,874		30,374
Restructuring		43		189
Other operating expenses, including direct costs of customer support, depreciation and amortization		34,123		31,073
Income (loss) from operations		1,708		(888	)
Non-operating expense		1,626		686
Income (loss) before income taxes and equity in (earnings) of equity-method investment	$	82	$	(1,574	)