|Shares Out. (in M):||55||P/E||0||0|
|Market Cap (in $M):||491||P/FCF||0||0|
|Net Debt (in $M):||354||EBIT||0||0|
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Internap Corporation (INAP) is small cap company in the IT infrastructure sector that significant earnings and cash flow upside as it fills its significantly underutilized company controlled datacenters. The stock is off of its highs recently due to a weak start to the year which resulted in the CEO leaving. However, INAP has the opportunity to generate about $1.00 of FCF/share in 2016 (before growth capex), and is an possible target for acquisiton in the growing data center industry. A takeout price could be $14/share which represents 55% upside.
Internap competes in the large and fast-growing market for Internet infrastructure services (outsourced data center, compute, storage and network services). Three complementary trends are driving demand for Internet infrastructure services: the growth of the digital economy, the outsourcing of information technology (“IT”) and the adoption of cloud computing.
As distributed applications, security concerns and compliance issues are placing new burdens on the traditional IT model and driving new costs and complexity, IT organizations are increasingly turning to infrastructure outsourcing to free up valuable internal resources to focus on their core business, improve service levels and lower the overall cost of their IT operations.
Amidst this environment, the emergence of public cloud Infrastructure-as-a-Service (“IaaS”) offerings has accelerated digital innovation by lowering the barrier to entry for new business creation. IaaS offerings allow new enterprises to procure and pay for infrastructure on an as-needed basis while minimizing upfront operating expenses, reducing complexity and increasing agility.
The Internet infrastructure services market comprises a range of infrastructure offerings that have emerged in response to shifting business and technology drivers. Internap competes specifically in the markets for retail colocation, hosting and IaaS. Different customer use cases and business requirements dictate the need for specific services or a combination of services enabled through hybridization.
|Total Data Center Revenue||250||278|
|Total IP Revenue||84||80|
|Direct Cost of Sales and Service||130||135|
|Direct Cost of Customer Support||40||43|
|Sales and Marketing||41||44|
|General and Admin||35||35|
|Total Operating Expense||246||257|
This is not a recommendation to buy or sell shares. The views expressed above are subject to change without notice and we may trade in any manner, whether consistent or inconsistent with this recommendation. The information above is from various public sources. The author has not independently verified this information and makes no representations as to the accuracy or correctness of any such information. Any forecasts made in this writeup are estimates and may not come to fruition. The author takes no obligation to update any opinions or information above which may change in any way at any time.
Executing on sales growth.
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