Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Internap Corp. Slumped on Friday

By Timothy Green - Sep 25, 2015 at 1:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Internet infrastructure provider slashed its guidance for the full year.

What: Shares of Internap (INAP), a provider of Internet infrastructure services, collapsed on Friday after the company updated its guidance for the full year, cutting its expectations for revenue, adjusted EBITDA, and capital expenditures. At 1:40 Friday afternoon, the stock was down about 18%.

So what: One surefire way to disappoint investors is to slash previously announced guidance, and that's exactly what Internap has done. For the full year, Internap now expects revenue between $320 million and $325 million, down from a previous range of $331 million and $337 million. With 2014 revenue of $335 million, the chance of growth baked into the previous guidance has transformed into a revenue decline.

Adjusted EBITDA was previously guided to be between $87 million and $93 million for the full year, but Internap now expects adjusted EBITDA of $80 million to $85 million. Guidance for capital expenditures was also slashed, with the company now expecting total capex to be between $60 million and $70 million, down from a previous range of $70 million to $80 million.

Now what: Internap CEO Michael Ruffolo pointed to orders for the company's Managed Internet Route Optimizer being pushed into 2016 as the reason for this guidance cut: "While we have built a strong sales funnel for MIRO Controller, revenue contribution for 2015 will likely be lower than previously anticipated as orders are pushed into 2016 due to customer budget cycles. We remain on a path toward the generation of sustainable positive free cash flow, as early as the fourth quarter of 2015, driven by stable bookings despite headwinds from the strengthening US dollar."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Internap Corporation Stock Quote
Internap Corporation

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.