INAP: Continues to do well.There have been some positive comments regarding their presentation at the Internet Conference in Arizona:
They say that business remains good, and that since 3Q00:
• five cities have turned operating income positive. This was achieved between 15 to 22 months, ahead of the company’s 24 month target.
• 28 service points were deployed versus 23 at the end of the last quarter.
• EBITDA losses should bottom out in 4Q00 and
improve thereafter. 60% gross margin and 40%
operating income margins are being achieved.
• 1,000 customers should be installed by late 1Q01 to early 2Q01. This signals solid growth expectations from 550 installed customers at 3Q00.
Demand appears to remain intact. InterNAP should benefit from the continued migration of data from private to public networks.
To-date, only 10% of data traffic is carried on the Internet, while the expectation holds at 80%.
There were some other points that support InterNAP’s business fundamentals:
InterNAP reports continued declines in bandwidth costs. These declines are now roughly from 30 to 40% per year, and when averaged, should show a healthy increase from the 23% average declines reported from September 1999 to September 2000. As the company builds traffic on its overlay network, it is able to exercise stronger purchasing power with its carriers.
On average, customers are now contracted for 2 years, while bandwith prices are contracted for one year.
As prices drop, InterNAP engages in, at a minimum, 6 month pricing reviews, to adjust to market levels. This benefits the company’s expense line. However, its top line remains fairly intact as customers typically take roughly another 9 to 18 months before making attempts to re-negotiate its price.
Even with the re-negotiated price, InterNAP still maintains its premium pricing.
The company’s shift to the service point strategy should help accelerate ROI.
The company’s strategic alliance with NTT provides access to the large Japanese enterprise market and fosters strong execution and marketing alliance to a new international presence.
Presently trading at 9 3/8 (up 9.22%) on volume 1,248,100. Today's H 9 5/8.
It looks good to me.
Bernard |
