Shares of Internap (INAP) lost a third of their value today after the company said that large service credits for several customers would delay the filing of its annual report with the SEC. Internap said it will likely need to refund at least $1 million to $2 million, and that its analysis “is still ongoing and subject to change.” The issue has delayed the financial statements and audit required for filing with Internap’s 10-K report.
Internap shares closed down $2.33 at $4.09, a drop of 33 percent for the day, in trading on the NASDAQ exchange. Merriman, Curhan, Ford & Co. analyst Colby Synesael dropped his rating on Internap from “buy” to “neutral” on the news.
Synesael says several hundred customers have requested credits for outages 
on the CDN operated by VitalStream, which Internap acquired last February 
. “Apparently, many of these customers used the legacy VitalStream portal to let the company know this, which Internap was no longer using, and did not discover until recently when it began to contact customers for late payment,” Synesael writes.
Synesael said some of the customers that sought service credits may have already left, meaning Internap’s customer count could be lower than the most recent figures from the company, and revenue guidance for 2008 may be lowered.
The company said its review of customer credit requests could affect previous reports for individual quarters of 2007, and that management was assessing “potential control implications” in its analysis. The credit requests were filed in 2008 for services provided in 2007. Internap also said it had discovered that $400,000 in interest income that had been reported as an unrealized gain in stockholders’ equity.
Internap has requested a 15-day extension in the filing deadline for its 10-K, and said it expects to be able to complete the report within that time frame.
provides colocation and intelligent routing services that help bypass Internet congestion points. Internap is in the midst of an active expansion, and plans to add an additional 50,000 square feet of data center space 
in the first half of 2008, which will allow it to offer more services to its 3,500 customers.
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URL to article: http://www.datacenterknowledge.com/archives/2008/03/19/internap-shares-slide-on-customer-credits/
URLs in this post:
 credits for outages : http://blogs.barrons.com/techtraderdaily/2008/03/19/internap-10-k-delayed-some-customers-seek-rebates-merriman-downgrades-rating-expects-08-guidance-cut/?mod=googlenews_barrons
 acquired last February: http://www.datacenterknowledge.com/archives/2006/Oct/12/internap_to_buy_vitalstream_for_217_million.html
 Internap: http://www.datacenterknowledge.com/archives/internap-index.html
 data center space: http://www.datacenterknowledge.com/archives/2007/Nov/06/internap_plans_more_data_center_growth.html
 Rich Miller: http://www.datacenterknowledge.com/archives/author/richm/
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