Many eyes have been trained on today's report by Akamai (NASDAQ:AKAM, news, filings). The company upset the status quo in the fall by lowering prices and setting off a bit of a pricing war. Events went better than planned, and in December they unexpectedly offered increased guidance. But what is really going on in the CDN marketplace has been somewhat opaque until these numbers. What numbers, you ask? Oh yeah...Here is a quick table:
As you can see, Akamai did not disappoint. Revenues of $238.3M brought an emphatic end to the revenue stagnation they had been struggling against - that's 15% sequential growth, very powerful even for their seasonally strongest quarter. And they did so without doing further damage to their margins, as lower prices apparently brought in enough new bits to gain the advantages of scale. Overall Akamai had a heck of a quarter by any measure.
For 2010, the company did not offer full year guidance - just that they are cautiously optimistic. They have now used up all much of their net operating losses, and hence will be paying more taxes going forward which will make apples to apples comparisons a bit more difficult for a while. For the first quarter revenues are expected to fall sequentially to $224-233M. Gross and EBITDA margins will fall slightly, and earnings per share of $0.30-0.32.
The stock is down after hours, but the stock has been rising in anticipation for months and likely simply overshot in the near term. Now the question is how the competition fared as Akamai roared and how effective their response will be.