Why Internap Need to Figure Out What Business It’s In
David Gross submits:
Internap (INAP) reported yesterday that quarterly revenues had declined 6% YOY to $61 million (see transcript here). The drop was expected as the company is trying to transform itself from a reseller of other provider’s assets to a facilities-based data center provider. As part of that initiative, it has committed to a $50 million capital program.
Financially, Internap looks like the anti-Level 3 (LVLT). It shares Level 3′s broad product line, but historically it has taken a hit on its income statement for reselling services at low margins, while Level 3 has taken a hit on its balance sheet by building large networks. Internap has much lower debt/revenue and much higher revenue/PP&E than Level 3 as a result. But now Level 3 is cutting capex to shore up its balance sheet, while Internap is increasing capex to improve its income statement.
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