A Big Upgrade for Internap Network Services

After spending much of the past six months at a less-than-impressive three-star rank, Internap Network Services (Nasdaq: INAP  ) has impressed enough top-performing members of our 160,000-strong Motley Fool CAPS community to climb back up to four stars. A total of 270 members have given their opinion on the Internet solutions firm, with many of them offering analysis and commentary explaining the recent optimism.

Improving quarterly results have more CAPS members believing in the turnaround potential of Internap, and many believe that its restructuring efforts will pay off as the company has been shifting its strategy to improve its bottom line. 

Similar to competitor Level 3 Communications' (Nasdaq: LVLT  ) five-quarter loss streak, Internap is struggling to shake free from a string of losses and deliver consistent profitability. Its shift of investments into upgrades and new product development could help improve its IP services segment, and being in the business of content delivery gives Internap a lot of potential in a growing industry. Indeed, leading players in the space like Rivals Limelight Networks (Nasdaq: LLNW  ) and Akamai Technologies (Nasdaq: AKAM  ) continue to give bullish outlooks for demand as more high-quality content is being delivered online.  

Internap's new Accelerated IP service aims to boost performance for enterprise Web services and online applications as performance becomes a key priority for businesses providing more services and applications online. While Rackspace Hosting (NYSE: RAX  ) is increasing its own data center square footage in anticipation of cloud-computing growth -- and salesforce.com (NYSE: CRM  ) is doing its part to get more applications on the Web with its VMware partnership -- Internap believes its network optimization services can help it stay relevant in the cloud-computing space even though it's not exactly a cloud company.

Internap's shifting strategy in its datacenter segment is targeted toward higher margins, a move that some CAPS members think is in the right direction. Larger peers like Equinix (Nasdaq: EQIX  ) are seeing an increase in demand for collocated services, and Internap is focusing on the higher-margin use of its own datacenters rather than using space leased from third parties. It's also expanding with a new facility in California, and it sees opportunity for expansion overseas as well.

Do you think Internap Network Services deserves its raised status? Add your thoughts in the comments box below, or head over to CAPS to rate the company and check out all the information and opinions the community offers, absolutely free.