InterCloud Systems Inc (OTCMKTS:ICLD) Sticks a Flag in Turnaround Territory

InterCloud Systems Inc (OTCMKTS:ICLD) Sticks a Flag in Turnaround Territory


InterCloud Systems Inc (OTCMKTS:ICLD), as you may know, has been suffering under the weight of extraordinary debt for roughly three years, during which the company’s shareholders have watched 99.97% of its equity value disappear. It’s almost inconceivable how poor this stock has fared in this time. However, to close the week, the company put out a new letter to shareholders from the CEO explaining this move and calling for renewed faith that it was a necessary step in the process of a turnaround that was managed strategically to avoid a bankruptcy court proceeding.

And now, the company is presenting this narrative as at an end, with a new dawn ahead: “After a long, arduous three-year period, the Class Action lawsuit and Derivative Actions that burdened the Company since mid-2014 have finally been settled and terminated as of December 5th 2017.  The Company spent a material amount of time and money throughout the process.  This liquidity drain is finally over and we can now be more focused on building our businesses and continuing to restructure..”

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

As ICLD 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, “ICLD 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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In the letter, the company’s executive leadership makes the case that it has arduously preserved longer-term value by its aggressive moves to right the balance sheet ship and take advantage of its strong revenues.

“Our senior secured debt which was approximately $9.4 million when we reported our December 31, 2016 numbers, is now less than $3.5 million.  We sold several non-core assets during the last year and are considering additional sales of non-core assets; we converted a substantial amount of debt to equity; we restructured subordinated debt and converted that into preferred equity and in the process created a substantial amount of shareholder equity on our balance sheet. We are making every attempt to totally eliminate all toxic paper on our books that have hurt our share price and market capitalization.”

We’ve witnessed 56% added to share values of the name over the past week of action, but that move comes in the context of a larger bearish trend. That said, ICLD has evidenced sudden upward volatility on many prior occasions. In addition, the company has witnessed a pop in interest, as transaction volume levels have recently pushed approaching 190% above the average volume levels in play in this stock over the longer term.

At this time, carrying a capital value in the market of $3.4M, ICLD has a store ($827K) of cash on the books, which compares with about $27.4M in total current liabilities. ICLD is pulling in trailing 12-month revenues of $50.3M. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -48.7%. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $ICLD stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $ICLD, either long or short, and we have not been compensated for this article.

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