Last evening, Internap, the biggest winner in our portfolio this year, reported outstanding quarterly results and once again raised estimates for 2006. The company now expects EBITDA of about $25 million and revenues of approximately $180 million in 2006. Internap’s stock rose to a 52-week high following the announcement. Internap now sports an enterprise value (EV) of about $585 million and trades for 23X EV/2006 EBITDA and 3.2 EV/2006 Revenue.

What is interesting is that Internap is a big customer of FTGX, and as such what is good for Internap must also be good for FTGX. In fact, we think that Internap, ex-VitalStream, remains one of the few publicly-traded companies that could be used as a comp. for determining a fair valuation for FTGX.

FTGX is expecting about $40 million in revenue and $5.2 million in EBITDA in 2006. Even applying discounts to Internap’s multiples, as detailed above, one can clearly see that FTGX remains extremely undervalued at current levels, trading at less than 9X EV/2006 EBITDA and at only 1.2 EV/2006 Revenue. Based on Internap’s results and Internap’s current share price, our fair valuation for FTGX therefore remains about $10. This price implies a valuation of 17.5X 2006 EBITDA and 2.3X 2006 Revenue.

Note: For our initial report on FTGX, please Click Here