InterCloud Systems Inc (OTCMKTS:ICLD) Bounces Higher on New Contracts

InterCloud Systems Inc (OTCMKTS:ICLD) Bounces Higher on New Contracts


InterCloud Systems Inc (OTCMKTS:ICLD) is a penny play in the cloud space that has started to garner major attention as the stock bounces up the chart. The proximal catalyst for the big pop to close the week appears to be the company’s announcement that it was recently awarded over $1.5 million in new contracts for professional services for new and existing customers. According to the company’s release on June 16th, a majority of the work is expected to begin immediately.

Mark Munro, CEO of InterCloud Systems stated, “As we have previously reported, we continue to divest ourselves from non-core assets while reducing debt.  Additionally, we continue to make significant strides in reducing salary and wage expense and SG&A expense.  We will continue to focus on our remaining traditional IT services companies while presenting our NFVgrid platform to Fortune 500 companies in the carrier and enterprise sectors.  Our goal is to become cash flow positive, make strategic acquisitions at the appropriate time and focus upon shareholder value.”

InterCloud Systems Inc (OTCMKTS:ICLD) offers cloud data and network management and security to telecommunications companies. That’s the gist here.

As the company tells the story, it provides “end-to-end IT and network solutions to the telecommunications service provider and corporate enterprise markets through cloud platforms and professional services in the United States and internationally.”

InterCloud operates through four segments: Applications and Infrastructure, Professional Services, Managed Services, and Cloud Services.

ICLD offers various services, including platform as a service, infrastructure as a service, database as a service, and software as a service; and network management, 24x7x365 monitoring, security monitoring, and storage and backup services.

It also provides software-defined networking (SDN) training, SDN software development, and integration, virtualized network functions validation in a multi-vendor environment, unified communications, interactive voice response, and session initiation protocol based call centers, as well as structured cabling and other field installations.

According to company materials, “InterCloud Systems, Inc. is a leading provider of cloud networking orchestration and automation, for  Software Defined Networking (SDN) and Network Function Virtualization (NFV) cloud environments to the telecommunications service provider (carrier) and corporate enterprise markets through cloud solutions and professional services. InterCloud’s cloud solutions offer enterprise and service-provider customers the opportunity to adopt an operational expense model by outsourcing cloud deployment and management to InterCloud rather than the capital expense model that has dominated in recent decades in IT infrastructure management.”

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As noted above, the company just announced over $1.5 million in new contracts for professional services for new and existing customers. As we have covered with this stock, the key here is whether or not the debt load is sustainable, finally, or whether it continues to be simply a guarantee of further dramatic distortion over time.

This new story is about the top-line, not the bottom line. One cannot know what the cost of that $1.5M will ultimately be. But the sense of top line growth is still important, and the market clearly has judged it matters, with the stock ripping higher in recent action.

The chart shows 72% added to share values of the listing over the past week of action, but that move comes in the context of a larger bearish trend. That said, ICLD is a stock who’s past is littered with sudden rips. Furthermore, the name has benefitted from a jump in recent trading volume to the tune of 79% over what the stock has registered over the longer term.

Now commanding a market cap of $14.98M, ICLD has a store ($816K) of reported cash on the books, which compares with about $34.7M in total current liabilities. One should also note that debt has been growing over recent quarters. ICLD is pulling in trailing 12-month revenues of $74.3M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -21.6%. As more color becomes clear on the name, we will review the situation and update our take. For continuing coverage on shares of $ICLD stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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