Internap Cuts 10%

April 1st, 2009 by · 5 Comments

As almost anyone might have expected, Internap Network Services (NASDAQ:INAP, news, filings) last night announced that 10% of its workforce will be looking for work. These days, new management nearly always means layoffs, and with Eric Cooney taking over from Jim Deblasio as CEO two weeks ago it was just a matter of time. In this case, it is mainly back office staff positions and apparently several senior management positions. Those management guys were probably leaving anyway, but the positions won’t be re-filled I guess. The cost savings will be approximately $5M annually, and the company will take a $1.2M charge in the 2nd quarter for severance and such.

What matters more than some predictable downsizing is what Internap plans to actually do with those who remain. Under DeBlasio, the plan of bundling CDN and IP/Colo and attacking the high end of the market just didn’t pan out. But it hasn’t really been replaced yet with anything detailed. They’ve retreated and regrouped, now it’s time to figure out which way to go. They’ve had luck only with colo lately, and you can only sell so much colo before you need to spend money to build more. They’re not Equinix (NASDAQ:EQIX, news, filings) and they’re not going to be Equinix any time soon. They’ve always been a boutique shop emphasizing service, my best guess is that soon we hear the phrase ‘cloud computing’ in some form.

Internap also provided guidance for Q1 results with revenue of $62-$65M and EBITDA of $4-5M.   Given that the quarter ended, we can probably take that as almost a pre-announcement, eh?

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5 Comments So Far

  • FM says:

    The comment about Equinix is especially amusing considering Internap was an early stage (and significant) investor in Equinix.

  • Back office staff positions? I guess dumping the entire cloud computing team and systems engineers count as “back office” now.

    • Rob Powell says:

      They dumped the cloud computing team? Well there went my guess as to the future…

      Sorry to hear it, I hope you and the others land on your feet.

  • Jeff says:

    Systems engineers = NOC team?! I’d always considered InterNAPs NOC to be once of its strongest selling points; a phone call would always get you someone who was very knowledgeable.

    I can’t say dropping the cloud idea is a bad idea…there seem to be too many established players already

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