OPERATING SEGMENTS

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

OPERATING SEGMENTS

7.             OPERATING SEGMENTS

We operate in two business segments: data center services and IP services. The data center services segment includes colocation, hosting and cloud services. Colocation involves providing physical space within data centers and associated services such as power, interconnection, environmental controls and security while allowing our customers to deploy and manage their servers, storage and other equipment in our secure data centers. Hosting and cloud services involve the provision and maintenance of hardware, operating system software, management and monitoring software, data center infrastructure and interconnection, while allowing our customers to own and manage their software applications and content. Our IP services segment includes our patented Performance IP™ service, CDN services and IP routing and hardware and software platform.

Segment profit is segment revenues less direct costs of network, sales and services, exclusive of depreciation and amortization for the segment and does not include direct costs of customer support, direct costs of amortization of acquired technologies or any other depreciation or amortization associated with direct costs. The following table shows operating results for our business segments, along with reconciliations from segment profit to loss before income taxes and equity in (earnings) of equity-method investment:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues:
Data center services	$	61,640		$	45,488		$	181,318		$	135,461
IP services		23,027			24,084			69,378			73,794
Total revenues		84,667			69,572			250,696			209,255
Direct costs of network, sales and services, exclusive of depreciation and amortization:
Data center services		27,716			23,171			80,170			68,461
IP services		9,432			9,624			29,300			29,858
Total direct costs of network, sales and services, exclusive of depreciation and amortization		37,148			32,795			109,470			98,319
Segment profit:
Data center services		33,924			22,317			101,148			67,000
IP services		13,595			14,460			40,078			43,936
Total segment profit		47,519			36,777			141,226			110,936
Exit activities, restructuring and impairments		56			274			3,001			1,206
Other operating expenses, including direct costs of customer support, depreciation and amortization		50,498			37,857			150,311			111,362
Loss from operations		(3,035	)		(1,354	)		(12,086	)		(1,632	)
Non-operating expenses		6,550			2,496			20,331			8,003
Loss before income taxes and equity in (earnings) of equity-method investment	$	(9,585	)	$	(3,850	)	$	(32,417	)	$	(9,635	)