Internap Cuts Costs, Lays Off 45

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Internap Network Services (INAP) said today that it will lay off 45 employees, or about 10 percent of its workforce. The job cuts are focused in back-office staff functions, but also include “the elimination of certain senior management positions.” Internap, which specializes in colocation and Internet routing services, says the move will save approximately $5 million in annualized operating expenses. The company expects to take a one-time restructuring charge of about $1.2 million, most of which will be recorded in the first quarter of 2009.

The move comes just two weeks after a leadership change in which Eric Cooney took the reins as president and CEO. “These actions simplify our organization and enable us to focus and invest in our core competencies including: customer support, engineering, and sales,” said Cooney. “By acting decisively, we better prepare the company to manage through a tough economy, improve results and increase value for customers and shareholders.”

Cooney started on March 16, succeeding James DeBlasio, who had been president and CEO of Internap since 2005. In addition to announcing the cost reduction plan, Internap also provided revenue and EBITDA estimates for first quarter 2009. The company also said revenue for the quarter is expected to be in the range of $62 to $65 million, roughly in line with Wall Street expectations, and adjusted EBITDA is expected to total between $4 and $5 million.

In March 2008 the company lowered its revenue guidance to reflect the impact of outages on the VitalStream network. In October Internap took a $100 million charge to reflect the decreased value of its CDN business.

About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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