Internap Shares Jump on Investor Stake

Shares of Internap Network Services (INAP) are higher this morning, apparently due to  growing interest in the company’s shares in investment funds. Today Dimensional Fund Advisors, an investment group based in Austin, Texas, said in an SEC filing that it owns 2.6 million shares (5.25 percent) of Internap’s stock. In late morning trading, shares of Internap are trading at $4.59, up 20 cents (about 4.5 percent) for the session. At that price, Dimension’s s take is valued at about $12.3 million.

Dimension is the third investment company to take a large position in Internap in the past two weeks. On Jan. 29 BlackRock Inc. disclosed a 5.9 percent stake in Internap, while Kornitzer Capital Managment said on Jan. 22 that it owns 6.7 percent of INAP shares.

Internap provides colocation, content delivery and network optimization services from a network footprint of about 250,000 square feet of space. Since taking over last year, CEO Eric Cooney has focused on an expansion of the company’s data centers, while it reduces its dependence upon space leased from third-party providers.

Roundup: SGI, Level 3, Internap

Here’s a roundup of some of some of this week’s headlines from the data center and hosting industry:

SGI Selected by Institute of Cancer Research. SGI announced Tuesday that the Institute of Cancer Research (ICR) has selected SGI Altix UV with Intel processors to support its research. The SGI high performance computing (HPC) facility will provide ICR with a massively scalable shared memory system to process hundreds of terabytes of data across thousands of CPUs. The SGI Altix UV supports up to 16 terabytes of global shared memory in a single system image. ”Altix UV will meaningfully transform HPC by drawing on large memory capacity, high core count and scalability of our forthcoming next generation Intel Xeon processor-based server platform, for the expandable server segments (codenamed Nehalem-EX),” said Richard Dracott, general manager of high performance computing at Intel.

Level 3 delivers backbone for TDS Telecom. Level 3 announced that it will provide backbone network connectivity for TDS Telecommunications to support the recent deployment of their all-IP nationwide network.  “The Level 3 network enables TDS to deliver high-quality services to our end-user customers, while also providing operational and cost benefits for TDS to better manage our nationwide network,” said Ken Paker, Vice President Network Services at TDS.  A new 10 Gbps network architecture allows TDS to connect core locations with more than 25 10 Gbps wavelengths, provided by Level 3.  TDS is a Madison Wisconsin based company that is the eighth largest wireline phone company in the U.S.

Internap Provides CDN for Sundance Festival.  Internap Network Services (INAP) announced that they are an official provider of Content Delivery Network (CDN) services for the 2010 Sundance Film Festival in Park City, Utah. Sundance will use the CDN to streamline the creation, delivery and management of interactive web content that promotes the event itself and the work of independent filmmakers year-round.  “Internap’s CDN allows us to easily create and share streaming video and other new types of content – an increasingly vital part of building awareness of our artists and bringing their work to a global audience – while ensuring a consistently reliable viewing experience, even during the dramatic spike in web traffic that occurs during the Sundance Film Festival,” said Joseph Beyer, associate director at Sundance Institute Online.

Roundup: Internap, Rackspace, Joyent, Isilon

Here’s a roundup of news announcements from the data center and hosting industry:

• Internap Enhances CDN for High Quality Video. On Tuesday Internap Network Services announced enhancements to its content delivery network (CDN) offering, including new ease-of-use functions and automation of key CDN capabilities.  A comScore Video Metrix service poll showed that in September 2009 more than 84.8% of the total U.S. Internet audience watched online video. Version 5.0 of Internap’s CDN MediaConsole includes an integrated rule-based transcoding that automatically converts video into the ideal formats for a broad range of devices.  It also performs a continuous bitrate adjustment that dynamically adapts video streams based on the capabilities and bandwidth of the network.  Internap is showcasing its CDN offering at the Streaming Media West conference November 17-19.
• Rackspace Launches Cloud Drive. Rackspace (RAX) announced a set of new product offerings that help businesses move their IT applications into the cloud.  New products include Cloud Drive, Server Backup, and an upcoming release of Hosted Microsoft SharePoint.  The new cloud products mark an aggressive move by Rackspace to expand into collaboration and backup applications and compete in the software-as-a-service market.  Rackspace Cloud Drive is a cloud-based, online file storage application that allows individuals and teams to store, share and backup files. Rackspace Server Backup is a cloud-based, online server backup application designed to protect file server data.  Both Server Backup and Cloud Drive are powered by technology from Jungle Disk, a Rackspace subsidiary acquired in 2008.

Internap Expands Seattle Data Center

Internap Network Services (INAP) said Thursday that it will expand its data center in Seattle as part of a broader effort to shift more of its colocation business from partner data centers into facilities owned by Internap. The Seattle expansion is expected to cost $22 million, or nearly half of the $50 million Internap has earmarked for its data center expansion.

The project will add 15,000 net sellable square feet of capacity to Internap’s current footprint in Seattle, with the new space expected to open during the third quarter of 2010. “Seattle was a compelling choice for expansion because of our multi-facility footprint, local market knowledge, existing sales and support infrastructure as well as our ability to leverage brand reputation,” said Internap CEO Eric Cooney. “We feel this market offers Internap a unique opportunity to expand with relatively low risk and relatively high reward.”

Earnings: Cisco, SGI, Limelight, Internap

Here’s a roundup of quarterly financial results announcements this week:

• Cisco reports first quarter 2010 Earnings.  Cisco reported first quarter results Wednesday for the period ended October 24, 2009.  Net Sales were $9 billion in the first quarter, a decrease of 13% year over year.  CEO John Chambers noted that the fourth quarter of 2009 was a clear tipping point and first quarter 2010 results continued to reflect strong sequential growth trends. Chambers also said “a new model of productivity based on collaboration is clearly emerging and we believe this may be the most profound opportunity for businesses in our 25 years as a company.” Sitting on total cash of $35.4 billion, the Cisco build – buy – or partner innovation engine is ready gain momentum in 2010.  Cisco also announced that up to $10 billion in additional repurchases of its common stock was authorized by its board of directors.
• SGI reports first quarter 2010 results. SGI reported first quarter 2010 results Wednesday for the period ending September 25, 2009.  Revenue increased by 103% from the prior quarter and 88% from the comparable year ago quarter on a non-GAAP basis. “Operationally, our integration is ahead of schedule in most key areas,” said SGI CEO Mark J. Barrenechea. “We also introduced new products that could expand our addressable market by over $1.7 billion while investing for long-term growth.” Cash, cash equivalents, investments, and restricted cash for the end of Q1 was $123.5 million, compared to $139.5 million at the end of the prior quarter.

Roundup: Energy-Aware Routing, Savvis, XO, Juniper

Here’s a roundup of some of some of this week’s headlines from the data center and hosting industry:

• Energy-Aware Internet Routing. An energy reduction of as much as 40% could be seen by rerouting data to locations where electricity prices are lowest on a particular day.  This was according to a study from MIT, Carnegie Mellon University, and Akamai.  MIT PhD student Asfandyar Qureshi first outlined the idea of a smart routing algorithm in October 2008 and he then approached researchers at Akamai to obtain the real-world routing data needed to test the idea.  ”The researchers first analyzed 39 months of electricity price data collected for 29 major US cities. The team then devised a routing scheme to take advantage of daily and hourly fluctuations in electricity costs across the country”.  Lawrence Berkeley National Laboratory staff scientist Jonathan Koomey said “the trick is to be able to control these systems well enough to create controls that are cheap enough to be able to take advantage of the arbitrage opportunity available from different electricity prices, without effecting reliability or latency.”  The research paper, to be presented at SIGCOMM 2009 can be found here.
• Tradebeam selects Savvis to support IT infrastructure. Savvis announced Monday an agreement to provide hosting services to TradeBeam, a software-as-a-service provider for global trade management (GTM).  TradeBeam’s solutions facilitate billions of dollars of global trade.  TradeBeam Vice President of IT said “Savvis is an industry leader offering a global footprint of high performance SAS 70 certified data centers integrated with one of the world’s largest Tier 1 networks”.
• XO Communications embarks on third nationwide network capacity upgrade. The XO inter-city transport network will more than double in capacity with the latest upgrade, to be completed later this year.  XO Communications again chose Infinera products to deploy the ultra-long-haul network, this time using Infinera’s ILS2 line and delivering 160 wavelengths on a single fiber.  The 1.6 Terabits/second optical capacity will service carriers, service providers and enterprise customers as well as XO’s Carrier Services network transport offerings.  The current Infinera DTN system is the only DWDM system with 160 wavelengths in the C-band and is scalable to 8 Tb/s in the future.

A Closer Look at Internap’s Expansion Plans

Last week Internap Network Services (INAP) outlined plans to invest an additional $50 million to expand its data center footprint in “two or three markets” during 2010. “With successful track record of growing our data center business, a strong industry outlook, and the intrinsic value of more company controlled occupancy, we believe this is a sound investment for Internap,” said CEO Eric Cooney. Internap says it doesn’t foresee a need to borrow to fund the expansion.

Internap operates its own data centers, but also leases space from data center partners. Internap operates 144,000 square feet of its own space and leases 106,000 square feet. Paolo Gorgo has an interesting analysis of Internap’s data center operations at Seeking Alpha, which shows that Internap had actually done a better job filling space in partner facilities than in its own sites, partly due to churn issues. So why build additional space of its own?

Is the Customer Always Right? Not at Internap

Data center providers are usually loathe to get in public disputes with customers, as it has a way of converting  them into former customers. There’s been a doozy of a public spat this week involving dueling finger-pointing between Internap Network Services (INAP) and Ooma Inc. At issue is a network outage on Monday that disrupted service for Ooma’s VoIP customers and prompted an unflattering writeup on TechCrunch,

Ooma chief marketing officer Rich Buchanan used his Twitter feed to blame Internap for the problems.”Ooma issues were linked to an outage at Internap, Buchanan wrote. “It also affected RIM, Google, Yahoo, Blue Cross, TM, Verizon, and others.”

When media reports began citing Internap, company spokeswoman Debra Forrester denied that Internap had any downtime, telling Betanews and the Business Times that the problems must be on Ooma’s network.

Internap Cuts Costs, Lays Off 45

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.”