NEW YORK ( TheStreet) -- Internap Network Services Corporation (Nasdaq: INAP) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • INAP, with its decline in revenue, underperformed when compared the industry average of 26.3%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 40.50% is the gross profit margin for INTERNAP NETWORK SVCS CORP which we consider to be strong. Regardless of INAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, INAP's net profit margin of -4.30% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to $4.60 million or 70.01% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, INTERNAP NETWORK SVCS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 105.5% when compared to the same quarter one year ago, falling from -$1.27 million to -$2.61 million.

Internap Network Services Corporation provides information technology (IT) infrastructure services. The company operates through two segments, Data Center Services and IP Services. Internap Network Services has a market cap of $304.5 million and is part of the technology sector and internet industry. Shares are down 3.5% year to date as of the close of trading on Thursday.

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