Nice day today, though it was coming out of a trough that was kind of a fluke. But good price action, good volume and perhaps a good opportunity for follow-through tomorrow.
Here's some info from Dow Jones:
May 17, 2002 Dow Jones WebReprint Service®
Internap, With Losses, Depressed Stock, Looks To Rebound
By PAULA L. STEPANKOWSKY
DOW JONES NEWSWIRES
LONGVIEW, Wash. -- When the Internet bubble burst in 2000, Internap Network Inc.'s (INAP) stock price, which once traded as high as $111, tanked along with it.
Now, with well-publicized difficulties in the telecom sector, the Seattle company's stock price is being further hammered as investors mistakenly associate it not only with Internet companies, but with telecom companies also, said Chief Executive Greg Peters in an interview.
Peters, who was brought in to lead the Seattle Internet traffic management company on April 4, says while Internap's early customers included many Internet companies, the bulk of its more than 1,000 customers now are large corporations with large data needs. These include the Associated Press, J.P. Morgan Chase & Co. (JPM), Amazon.com Inc. (AMZN), the Nasdaq Stock Market, AMR Corp.'s (AMR) American Airlines unit, The Economist Group and Morningstar.
Internap's proprietary Private Network Access Point, or P-NAP, routing technology acts as an intermediary between corporations and the nine Internet backbone services. The technology reroutes packets of data around traffic jams on the Internet by moving data temporarily onto Internap's own private network.
Because Internap has agreements that allow it to use space on all nine backbone services, it can route its customers data to the service that has the least traffic on it at any given time, Peters said.
"The data growth side of the business has doubled over the past year, so we're still seeing the demand," Peters said.
Internap Sees EBIDTA Profit By Year-End
Like many startup companies using the Internet, Internap racked up large losses as it built its business. Its accumulated deficit totals $724 million.
But a restructuring that began last year cut hundreds of employees, cleaned up the balance sheet and began narrowing losses, Peters said. Internap now expects to be profitable on an earnings before interest, taxes, depreciation and amortization basis in the fourth quarter. Profitability on a generally accepted accounting principles basis will come between three and four quarters after that, Peters said.
The company lost $9.8 million on an EBIDTA basis and $20.3 million on a GAAP basis in the first quarter. But the losses narrowed on a sequential basis and were sharply lower than the EBIDTA loss of $34.7 million and the GAAP loss of $266.8 million a year ago.
The company's stock price, which was trading at 50 cents recently, does not reflect the restructured balance sheet and the revenue outlook for the company, Peters said, and the company is working with Nasdaq to maintain its listing.
"We're growing top-line revenue and conserving cash and making sure we reach the financial metrics Wall Street is looking for us to reach," Peters said. "It's in our hands to get the stock price up."
In addition to marketing Internap's core technology, Peters will increase revenue by offering additional applications, such as voice over Internet or video, to customers in partnership with other companies.
"Our platform is enabling these products to actually be used by enterprise and carrier customers at a greater rate than ever," Peters said
Peters, who was CEO of Mahi Networks of Petaluma, Calif., spent a good part of his first 45 days on the job meeting with customers and service partners to better match the company's services with customer demand, Peters said.
"I want to understand how they want products and services bundled that ride over our IT platform," Peters said.
Current service provider partners include VeriSign Inc. (VRSN) and Akamai Technologies Inc. (AKAM). Internap is working to forge partnerships with other companies to offer more services. Peters said there will be announcements of more partnerships in the coming quarters.
Telecom Difficulties Actually Helping Internap
Despite the difficulties of the past year, Internap's revenue is rising. In the first quarter, it reported revenue of $32.6 million, a 7% increase over the fourth quarter and a 15% increase over a year-ago.
John Scanlon, Internap's chief financial officer, said the company's revenue will continue to rise in the second quarter. Internap added 142 new customers in the first quarter, a pace that's likely to continue in the second quarter, Scanlon said.
The company's gross margin rose to 26% in the first quarter from 20% in the fourth quarter.
The well publicized difficulties of such Internet backbone companies as WorldCom Inc. (WCOM), and Qwest Communications International Inc. (Q) has actually increase demand for Internap, Peters said.
As corporations continue to move their private networks to the Internet to get the most efficiency, the financial health of the companies that own the Internet backbone is of increasing concern to corporate clients, Peters said.
Companies concerned their backbone provider might go out of business are calling Internap because the company is backbone neutral and can help route a company's Internet traffic over the network of any Internet backbone company, Peters said.
"They don't want that risk, so they contract with us and we evaluate the quality of the backbones, and we can route traffic to areas that mitigate risk to customers," Peters said.
At the end of the first quarter, the company had $64.7 million in cash on hand. It spent $17.6 million in cash during the quarter. In the second quarter, the company has said it will have an EBIDTA loss of between $6 million and $8 million and use between $14 million and $16 million in cash.
Scanlon said the company "certainly" has enough cash to see it through EBIDTA profitability. After that, depending on revenue growth, the company would evaluate whether it would need to raise more cash.
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