The shakeup at Internap Network Services (NASDAQ:INAP, news, filings) continues. From an SEC filing today:
On July 14, 2009, Internap Network Services Corporation (the “Company”) announced the elimination of the Chief Technology Officer position and, as a result, that Timothy P. Sullivan’s employment will terminate effective July 31, 2009. The Company anticipates entering into a separation agreement with Mr. Sullivan regarding the terms of his separation, a copy of which will be filed with the Securities and Exchange Commission following execution.
Of course, Eric Cooney just took over as the new CEO in March, and since then it apparently hasn’t been a fun place to work. The company laid off 10% of its workforce in April, including its cloud computing team, a bunch of systems engineers, and a wide array of middle management. Last month, it was their VP of engineering Steve Kiene who left the company, and now their CTO is leaving abruptly.
I have to ask, when a high end niche technology company has this much turnover amongst its technical leadership, can it ever be good? Have the wheels come completely off or is this all part of the new CEO’s master plan? Just how much housecleaning can one do before it’s a full scale remodeling…
The company has been having trouble settling on a new path. Its core IP transit business remains weak, it doesn’t have the funds to build datacenter space indefinitely, and its CDN business remains in the industry penalty box. Perhaps the next move for Cooney is simply to sell the company – he wouldn’t much need a CTO if that were the case.
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“”I have to ask, when a high end niche technology company has this much turnover amongst its technical leadership”””
Is IP and Colo really “niche” technology? Yes, when a new CEO comes in you expect him/her to bring their management team with them…that is more than typical…it is expected. They need people that are loyal to their vision/ideas…not people who were loyal to the ideas of the past.
I agree that IP is weak and CDN is an unknown at best. They have money to build out Colo via loans/cash…but obviously not indefinitely as you point out. Not sure what that comment is meant to imply.
The point remains that Cooney purchased $100k of stock on his own before joining…and came from a successful past which would allow him to pick his next destination. I have to believe he has a vision/plan for INAP that will make it a good decision for him – otherwise, why come? Market cap is at $150M…considering the cash and contracts this company has, this investment is a lot less risky than it use to be.
I think by “high end niche”, he’s referring to the fact they have a route-optimized transit product containing a lot of carriers selling at a premium price. Performance wise, it’s very good, but it is a niche because of Internap’s pricing. It’s great if you’re small or someone not pushing a lot of bandwidth and don’t want to worry about running your own BGP, or where the cost of transit isn’t a major percentage of your opex (like most e-commerce sites), but if you’re pushing a lot of traffic, it’s pretty uneconomical and you’re probably better off doing it yourself. In my experience, Internap is consistently double (or higher) the price of people like Level3, GC, at the same commit level, let alone quality tier 2s like Mzima, nLayer, Peer1, etc. Once you’re of a certain size, it’s cheaper to buy their Flow Control Platform and run your own mix.
Cooney did not “buy” $100k worth of stock- it was a stock grant from Internap as part of his employment agreement.
Eric is doing all the right things. The old inap management team was inept and not business savvy.
It is tough work righting the ship but Eric seems to have the balls to make it happen.
This is great news. Sullivan and Kiene were heading in the wrong direction.
Internap is a train wreck. Notice that there are no C-Level executives at all at Internap except for Cooney. This is because as a public company you have to disclose when C-Level execs leave. The last CTO was Fortune magazine’s Top 25 CTO’s in the Country. He left abruptly because Cooney is an operations guy and doesn’t have a clue about technology innovation (i.e. Cloud Computing).
Cooney has been there 5 years and has no direction or leadership skills at all. He is a joke as CEO. He brought in two clowns from ATT as Sales VP’s both complete failures. Too bad INAP has some decent IP and assets…