Internap Takes $99 Million Charge on CDN Assets
October 30th, 2008 By: Rich Miller
Internap Network Services (INAP) will take a $99.7 million charge to earnings to reflect the decreased value of its content delivery network (CDN), the company said Wednesday in a filing with the Securities and Exchange Commission. The charge reflects a sharp reduction in the “goodwill” value of the CDN operations Internap purchased in its $217 million acquisition of VitalStream in early 2007.
The writedown will be applied to earnings for the quarter ended Sept. 30, which Internap will announce on Nov. 6. Shares of Internap closed at $2.50 Wednesday, down 19 cents (7 percent) in trading on the NASDAQ exchange.
Internap noted that the non-cash charge “will have no impact on the company’s current cash balance or future cash expenditures, and will not result in a violation in any covenants of any of its debt instruments.”
Goodwill is commonly used in acquisitions to account for a premium above the book value of the acquired company. Internap said it evaluated the goodwill value of the Vitalstream CDN operation and decided Oct. 24 to reduce its carrying value by $99.7 million to $54.7 million.
Analysts have been speculating that Internap might write down much of the value of its CDN operation. In March the company said it would delay filing its annual report with the SEC as it sorted out up to $2 million in customer credits related to service outages on the Vitalstream CDN network, which had been plagued by outages early in the year. In August the company took a charge of $3 million for additional losses from the CDN business.
Content Delivery Network Blog | CDN Evangelist » Blog Archive » Internap Takes $99 Million Charge on CDN AssetsPosted October 31st, 2008
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