Internap reported earnings a short while ago, and comparing with the primer I posted earlier things don’t look particularly wonderful. IP revenues fell sequentially, as did CDN revenues. Colocation revenues were up, but not particularly strongly, and rising costs meant that EBITDA of $5.5M was well off the pace.
Record revenues yes, but well short of the growth that had been hoped for – as seen by the company’s downward revisions to both revenue and EBITDA guidance. Was it a weakening economy that took a bite out of IP and CDN revenues at Internap? Or was it just the full manifestation of last quarter’s operational snafus? Perhaps the conference call will shed some light.
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Categories: Content Distribution · Datacenter · Financials
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Will the stock drop all the way to $2.20 or so. The next dropping point from $3.60? Any feed back or guesses? Have a nice day.
Internap never loses an opportunity to lose an opportunity.
It’s not only about lack of execution, it is really about lack of strategic vision.
So much money, time, management focus wasted on CDN, losing sight on their colo business, the only growing revenue generator.
Pity. They need a new leadership. JMHO.
From the valuation point of view, INAP price is kind of too low. I don’t talk about the book value, majority of them are from the Goodwill introduced by Vitalstream merger.
It owns 114K sqf data center as of Q208, and it will roll out another 20-30K sqf in next 2 quarters. While the construction cost is about $1000 per sqf, INAP is marked with $120M price tag. At the $3.0 price level, INAP EV is about $110M. So that means, biz on 80K sqf leased DC, a patent protected backbone optimized system and the CDN network of 24 PoPs are free.
And INAP’s biz is different from EQIX and TMRK, whose core is to sell bandwidth at premium compared to other carriers. Its DC is to provide space for its bandwidth customer to connect their equipment to the network. To reach an economic scale, you must have DC space large enough like 30-50K sqf. Because their DC is too spread, if the bandwidth price is dropping they can’t generate biz efficiently like other DC providers.
From the ER, INAP CEO mentioned the traffic is 55% y2y growth but revenue is flat. So this means the bandwidth price dropped 36% in last 12 months.
Before we see a healthy trend in ip service, I believe the INAP will stay under $5 level.
“rising costs meant that EBITDA of $5.5M was well off the pace”
My calculation is quite off your number. 234M 07 Rev, 9%-13% rev growth, 11%-15% EBITDA margin. Even using the low numbers,
08 Est. EBITDA is $28M.
Solomon, my original numbers were based off of the previous guidance, which was 13-18% revenue growth and 17-20% ebitda margin. Also, the $5.5M was a quarterly number from their PR – so I’m not sure what we are comparing here.