Some excitement since they have a new CEO and they are embarking on a turnaround.
First a company description:
"Internap Corporation, formerly InterNAP Network Services Corporation, provides Internet infrastructure services. The Company operates through two segments: Data Center Services segment and Internet Protocol Services segment. It offers hybrid Internet infrastructure services, which enables customers to mix and match cloud, hosting and colocation for the combination of services. It also offers availability across a global network of data centers, and services backed by service level agreements (SLAs). The Company serves approximately 11,000 customers in various industries, including software and Internet; media and entertainment; business services; healthcare technology infrastructure, and telecommunications. Its Data Center Services segment includes colocation, hosting and cloud services. IP Services segment includes its performance IP service, content delivery network (CDN) services, IP routing hardware and software platform, and Managed Internet Route Optimizer Controller."
From the 10-K:
"The market for Internet infrastructure services is intensely competitive, remains highly fragmented and is characterized by rapid innovation, steady price erosion and consolidation. We believe that the principal factors of competition for service providers in our target markets include breadth of product offering, product features and performance, level of customer service and technical support, price and brand recognition. We believe that we can compete on the basis of these factors to varying degrees. Our current and potential competition primarily consists of:
● colocation, hosting and cloud providers, including Amazon Web Services; CenturyLink, Inc.; CyrusOne Inc.; Digital Realty Trust, Inc.; Equinix, Inc.; Microsoft Azure; Rackspace Hosting, Inc.; Softlayer (IBM); and QTS Realty Trust, Inc.; and ● ISPs that provide connectivity services and storage solutions, including AT&T Inc.; Akamai Technologies, Inc.; Cogent Communications Holdings, Inc.; Level 3 Communications, Inc.; Verizon Communications Inc. and Zayo Group, LLC."
So this turnaround is not going to be easy. The debt load stands at around $327MM (excluding Capital Leases) and is expensive at LIBOR + 600bps. 2017 guided EBITDA stands at $85MM (which includes some mysterious cost cutting initiatives). Now since this is a capital intensive levered fixed asset business, EBITDA is not a good measure of value. Interest expense runs at $30MM annually and Depreciation ran at around $89MM in 2015. So we have red income on the bottom line, which is ugly.
I want to see tangible signs of customers increasing their adoption of their systems before getting bullish. A capital raise is forthcoming and there's a lot of customer churn apparently that creates issues in this industry.
First a company description:
"Internap Corporation, formerly InterNAP Network Services Corporation, provides Internet infrastructure services. The Company operates through two segments: Data Center Services segment and Internet Protocol Services segment. It offers hybrid Internet infrastructure services, which enables customers to mix and match cloud, hosting and colocation for the combination of services. It also offers availability across a global network of data centers, and services backed by service level agreements (SLAs). The Company serves approximately 11,000 customers in various industries, including software and Internet; media and entertainment; business services; healthcare technology infrastructure, and telecommunications. Its Data Center Services segment includes colocation, hosting and cloud services. IP Services segment includes its performance IP service, content delivery network (CDN) services, IP routing hardware and software platform, and Managed Internet Route Optimizer Controller."
From the 10-K:
"The market for Internet infrastructure services is intensely competitive, remains highly fragmented and is characterized by rapid innovation, steady price erosion and consolidation. We believe that the principal factors of competition for service providers in our target markets include breadth of product offering, product features and performance, level of customer service and technical support, price and brand recognition. We believe that we can compete on the basis of these factors to varying degrees. Our current and potential competition primarily consists of:
● colocation, hosting and cloud providers, including Amazon Web Services; CenturyLink, Inc.; CyrusOne Inc.; Digital Realty Trust, Inc.; Equinix, Inc.; Microsoft Azure; Rackspace Hosting, Inc.; Softlayer (IBM); and QTS Realty Trust, Inc.; and ● ISPs that provide connectivity services and storage solutions, including AT&T Inc.; Akamai Technologies, Inc.; Cogent Communications Holdings, Inc.; Level 3 Communications, Inc.; Verizon Communications Inc. and Zayo Group, LLC."
So this turnaround is not going to be easy. The debt load stands at around $327MM (excluding Capital Leases) and is expensive at LIBOR + 600bps. 2017 guided EBITDA stands at $85MM (which includes some mysterious cost cutting initiatives). Now since this is a capital intensive levered fixed asset business, EBITDA is not a good measure of value. Interest expense runs at $30MM annually and Depreciation ran at around $89MM in 2015. So we have red income on the bottom line, which is ugly.
I want to see tangible signs of customers increasing their adoption of their systems before getting bullish. A capital raise is forthcoming and there's a lot of customer churn apparently that creates issues in this industry.
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