Internap Drops on Forecast, Downgrades

Internap Network Services (Nasdaq: INAP) fell US$1.16 to $3.19 in morning trading Wednesday, after the company, whichprovides routing services, said results for the quarter and year will bebelow previous expectations.

The company also announced plans to cut jobs.

Internap said it expects revenue for the first quarter ending in March tototal $27 million, with a loss before interest, taxes, depreciation andamortization of $39 million, or 26 cents per share.

Analysts at ING Barings, Merrill Lynch, Credit Suisse First Boston and DainRauscher Wessels reportedly lowered their ratings on Internap following thenews.

The Seattle, Washington-based company predicted full-year revenue of $160 million, upfrom $69.6 million in 2000, and a loss before items of $118 million, or 79cents per share.

Earnings before extraordinary items should turn positive inthe fourth quarter of 2002, two quarters later than previously expected, thecompany said.

Internap said cancellations and delays “have been more severe thananticipated,” and a number of its Internet customers continue to be hurt bythe recent economic downturn.

As part of a plan to cut costs, the company said it is laying off about 65employees. However, Internap said that it plans to add about 120 people during 2001.

“Despite current economic conditions, we continue to have a strong andgrowing customer base,” said president and chief executive officer Tony Naughtin.

Internap also said it is “evaluating a broad range of supplemental financingoptions,” including credit facilities and strategic equity financing.

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