Shares of Internap (INAP) are being hammered this morning on Wall Street after the company reported disappointing earnings and lowered its revenue guidance for the remainder of the year. Internap was trading down 35 percent at $2.82 early Wednesday, down $1.57 from Tuesday's close.
Internap continued to feel the effects of performance problems connected with former VitalStream customers. The company said it "determined that approximately $3 million of our accounts receivable balances in the quarter were doubtful of collection" and took a charge to earnings for that amount. Internap also projected weaker CDN growth and said that trend, along with the increased loss allowance, prompted it to lower its revenue guidance for the full year 2008.
"In CDN, order flow and sales conversions is weaker than we expected for the second quarter and the full year," said Internap CFO George Kilguss. "We believe some of this weakness is attributable to a difficult economy as we have seen increased competition and delayed purchase decisions for certain types of advertising dependent content delivery applications."
For the three months ended June 30, Internap reported a net loss of $3.2 million, or 7 cents per share, compared with a loss of $1.7 million, or 3 cents per share in the year-ago period. On an adjusted basis, excluding stock-based compensation expense and the write-off of an investment, the company reported a loss of $1.2 million, or 2 cents per share, compared with a profit of $2.3 million, or 5 cents per share, in the same quarter last year.
Analysts polled by Thomson Financial, on average, estimated earnings of 3 cents per share on revenue of $64.3 million. Analyst estimates typically exclude one-time items.