Internap: Prices Stabilizing

Network services provider Internap had good news on several fronts during yesterday's fourth quarter earnings call. In addition to detailing the company's financial progress, president and CEO Greg Peters offered an upbeat outlook on pricing. "We are seeing a significant stabilization on pricing," said Peters.

According to Peters, the trend in network services pricing is driven by the "stability premium" in a turbulent market. "There is evidence, albeit anecdotal, that prices have been stabilizing as customers consider quality of service and stability, and not just price," said Peters. "There was a tremendous flight to safety, which is eliminating the competitive behavior of some providers. There's less reason for these safe havens to continue to be so aggressive with pricing, to the point where some had priced services below their cost."

That trend, along with continuing cost management initiatives, helped Internap improve its direct margin from 41 to 44 percent, according to Peters, as the company recorded an EBITDA profit of $1.5 million in the fourth quarter, and a net loss of $14.5 million. The company has $25 million in cash, with a burn rate of $7.3 million for the quarter and anticipated cash outlay of $5.5 to $6.5 million for the first quarter of 2003. For the full year 2002, Internap's revenue was $132.5 million, with an EBITDA loss of $16.1 million and a net loss of $75.4 million.

Internap said it signed up 118 new customers in the quarter, bringing its total to 1,267. The company now has 340 employees, including 100 new hires in the Atlanta area, where Internap relocated its headquarters last fall. Peters said 41 workers relocated to Atlanta from Seattle, the company's original HQ site.

"This past year was an important turning point for Internap," said Peters. "This puts us in an excellent position to continue to grow our market share and revenues, at a time when competitors in our industry are faltering."