Akamai Rockets Ahead of the Pack

April 29th, 2010 by · 3 Comments

Akamai (NASDAQ:AKAM, news, filings) surprised the market yesterday with a its second sequential truly powerful earnings report, exceeding even that of the seasonally high fourth quarter.  The stock closed up some 19% on the day at 39.63.  That's about four times the low it hit back in November of 2008 at the height of the fiscal crisis when everyone was worried about the company's ability to fend off a gaggle of competitors.  The company's change in pricing policy in the second half of 2009 has been a huge success thus far.  What do the numbers look like, you ask?  Here's a table putting them in context:

Q1/09 Q2/09 Q3/09 Q4/09 Q1/10
Revenue 210.4 204.6 206.5 238.3 240.0
COS 60.4 60.0 62.0 67.6 67.4
SG&A 89.2 86.0 89.7 104.4 102.4
Gross Margin 71.3% 70.7% 70.0%

71.6%

71.9%
Adj. Fully Taxed EPS 0.31 0.29 0.28 0.34 0.35

Can't really argue with those Q1 numbers, and of course the market isn't.   Both guidance and expectations had suggested a pullback in revenue and earnings per share this quarter.  Akamai's surge seems to have come from its full portfolio, with value added services leading the charge but with media and entertainment also surging due to raw traffic growth.

For the second quarter, the company offered guidance of $236-246M in revenue and $0.32-0.34 in fully taxed adjusted EPS.  That doesn't seem particularly aggressive next to Q1, but it was also above analyst expectations which seemed to be in the $230M and $0.31 range - there will be some revised estimates coming out in the next few days no doubt.

As if that weren't enough, the company announced a further $150M extension to its share buyback program.  After a two year hiatus, the Akamai growth locomotive once again has the attention of the market.   Now if only the rest of the CDN sector can keep pace...

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Categories: Content Distribution · Financials

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3 Comments So Far


  • carlk says:

    There P/S is almost at EIGHT TIMES with a $7B market cap. When do you say NUFF with respect to their ability to garner what addressable market and for how long with networks they only share?

    BTW, they talk about networks and capacity as if they’re a legitimate infrastructure owner. How do you rationalize that? tia

  • Parkite says:

    They continue to be VERY aggressive on price, frequently lower than L3 and Limelight.

  • carlk says:

    They’ve been criticizing their partners in the last mile, especially cables and rbocs, for their spotty connections as well.

    I saw an analyst yesterday follow Sagan’s “wish list” identifying one billion in sales this year as if it’s a done deal. Sagan corrected himself during the conference, however, by stating it was more of a motivational tool for his crew listening on the call.

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