A Broken Company or a Buying Opportunity?
IntraLinks Holdings reported a disappointing quarter Wednesday morning, sending its stock plummeting. As Cramer put it, “the stock got beaten like an unruly red-headed stepchild.”
IntraLinks provides critical information exchange solutions. In other words, Cramer explained, it creates a safe and secure virtual deal room where companies involved in mergers can access confidential information outside their firewalls. It does the same thing for loan syndication.
However, these are one-time transactions, Cramer pointed out. The big opportunity for IL, Cramer said, has been its transformation into a company with more business offerings on a multi-year subscription basis.
Before the opening bell Wednesday, IntraLinks reported in-line earnings on weaker-than-expected revenues. It also issued guidance for the next quarter that was lower than what the analysts were looking for. The problem, Cramer explained, is that the company’s largest enterprise customer is no longer doing deals and is ramping down business by roughly $2 million per quarter. In turn, the customer will no longer need IntraLinks. Cramer said that will greatly hurt IL given the customer represents 10 percent of its enterprise sales.
The news caused the IL to fall to $25.50 a share, which is the same level at which IntraLinks did a big 7.5 million share secondary offering back in April. As a result, investors were quick to sell shares on Wednesday.
“Maybe IntraLinks needs to work on its customer concentration issues,” Cramer said. "But this really doesn’t strike me as the kind of problem that should make the company worth 30 percent less that it was yesterday.”
To find out what happened, Cramer sat down with IntraLinks’ CEO Andrew Damico. Watch the video to see the full interview.
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