Internap Network Services Corp (INAP) Reports In-Line Q4 EPS, Accelerates Business Unit Realignment and Updates Strategic Review Proces

Internap Network Services Corp (NASDAQ: INAP) reported Q4 EPS of ($0.14), in-line with the analyst estimate of ($0.14). Revenue for the quarter came in at $78.76 million versus the consensus estimate of $81.63 million.

GUIDANCE:

Internap Network Services Corp sees FY2016 revenue of $310-320 million, versus the consensus of $338.4 million.

• Adjusted EBITDA $80 million - $90 million
• Capital Expenditures $40 million - $50 million

Business Realignment and Strategic Review Process

Internap today also announced steps to accelerate its transition into two distinct business units: Data Center and Network Services and Cloud and Hosting Services.

Mr. Ruffolo continued, "Our team remains focused on improving our business results and earning the trusted relationship of our customers. We believe the changes to our business unit structure announced today will enable us to respond faster to the needs of our customers, while also eliminating non-core functions and better aligning our costs with the opportunities we see in the current market for each business.

"The business unit realignment also reflects insight we have gained from our strategic review process. In addition to facilitating the company's growth and creating cost savings, we believe establishing two distinct business units will open doors to more value-creating alternatives for the Company and our shareholders," said Mr. Ruffolo.

As previously announced on September 1, 2015, the Internap Board of Directors formed a Strategy Committee of independent directors to explore strategic alternatives to maximize shareholder value. With the assistance of its financial and legal advisors, Internap contacted a wide range of financial and strategic parties to ascertain interest in a potential transaction, resulting in multiple parties signing confidentiality agreements and conducting due diligence. While Internap received several preliminary, non-binding indications of interest with respect to a potential acquisition of the Company, due to a variety of factors, including the inability to obtain financing and volatility in the credit markets, no agreement was reached.

The Internap Board remains open to all alternatives for the Company and its business that would maximize shareholder value. Having conducted a thorough review for the sale of the Company as a whole, the Board has determined that accelerating Internap's business unit realignment best positions the Company for value creation as a standalone entity and also best facilitates the possibility of other value creating combinations.

The business unit realignment is designed to create more effective and efficient business operations, to improve customer and product focus and increase long-term shareholder value. As part of the realignment, the Company is redirecting its management and cost structure towards product and market opportunities where Internap believes it can create the greatest value for both customers and shareholders. These changes are expected to result in approximately $4.0 million to $5.0 million of annualized cost savings beginning in the second quarter of 2016. Savings will be generated primarily by optimizing the Company's cost structure during the business realignment, as well as reduced discretionary spending and marketing program efficiencies. Internap expects to record a one-time, below the line, restructuring charge of approximately $2.5 million to $3.0 million associated with severance and other costs to implement the plan.

For earnings history and earnings-related data on Internap Network Services Corp (INAP) click here.

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