The Red Bank, NJ-based IT company, which specializes in cloud hosting, has received unsolicited offers to purchase certain key assets, the company said in a statement on Tuesday. InterCloud's board will conduct a review of strategic alternatives, the company said.
"As our board conducts its review, our goal is to continue to grow our business and focus on expanding our gross margins," CEO Mark Munro said in a statement. "We remain focused on strong revenue growth for all of our operating segments and the deployment of leading edge cloud technology products and services."
There is no timetable for the board's review.
Separately, TheStreet Ratings team rates INTERCLOUD SYSTEMS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
We rate INTERCLOUD SYSTEMS INC (ICLD) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Currently the debt-to-equity ratio of 1.81 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.48, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, INTERCLOUD SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for INTERCLOUD SYSTEMS INC is currently lower than what is desirable, coming in at 33.21%. Regardless of ICLD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ICLD's net profit margin of -12.24% significantly underperformed when compared to the industry average.
- ICLD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 59.23%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the IT Services industry average, but is greater than that of the S&P 500. The net income increased by 69.3% when compared to the same quarter one year prior, rising from -$8.64 million to -$2.66 million.
- You can view the full analysis from the report here: ICLD
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.