Internap Network Services Corporation (INAP) President and CEO Eric Cooney Interviews with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - February 11, 2013 - The Wall Street Transcript has just published its Data Hosting Centers and Data Storage Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Data Hosting Centers - Flash Memory - Cloud Computing Secular Trends - Internet Infrastructure Build - Big Data, PCIe Storage, Cloud Computing and the Virtual Desktop - Data Center REITs - Colocation, Managed Hosting and Cloud Computing - Data Center Expansion -

Companies include: Internap Network Services Corp (INAP) and many more.

In the following excerpt from the Data Hosting Centers and Data Storage Report, the President and CEO of Internap Network Services Corporation (INAP) company strategy and the outlook for this important industry.

TWST: Overall, what trends are you seeing in demand, and how is that translating to pricing power for Internap?

Mr. Cooney: The macro driver is, of course, enterprises outsourcing their IT infrastructure. Depending on the source you choose to believe, the estimates are that about 80% of enterprise IT infrastructure is still in-house today. So there is a pretty compelling long-term opportunity for enterprises to migrate that 80% of their infrastructure, or at least a significant portion of it, to the outsourced model.

In terms of pricing trends, you really need to break it down by Internap's product portfolio. If we talk about pure IP transit, which is still a relevant part of our business, the trends for IP transit pricing remain to be steadily downward dollar-per-megabit pricing. That trend has been fairly consistent over the past several years, and at least based on our current view, we don't see that changing over the next several years.

That downward price-per-megabit trend is offset by an increase in value, but not entirely offset, when you look at Internap's IP services business. That's why you see our total IP transit revenue in decline. Overall price erosion is somewhat offset by volume increases, but not enough to completely offset the revenue decline. From a data center services product portfolio perspective, we see colocation pricing tends to increase on an annual basis. The cost of space and the cost of power tends to go up, so our pricing to our customers tends to go up on an annual basis.

On managed hosting and cloud, I would say trends over the past couple of years have been flat to slightly declining, although the cost of the underlying infrastructure - the cost of compute and storage - has likewise been declining. In terms of return on capital, we, and by extension our shareholders, have been fairly insulated from that. So positive trends overall in the data center services pricing dynamics.

TWST: What were the highlights from your most recent quarterly earnings, which I believe were for the third quarter?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Rates

View Comments (0)