Akamai (NASDAQ:AKAM, news, filings) reported its second quarter earnings today after the bell. The 800lb gorilla of the CDN space is following up on very powerful fourth and first quarters, sooner or later the pendulum must swing back right? Well, it didn't swing back just yet, but this time Akamai only managed to hit the high end of its own guidance. What other providers wouldn't give to hear themselves in that sentence... Here is a quick table of their second quarter 2010 results in the context of the prior four quarters:
|$ in millions||Q2/09||Q3/09||Q4/09||Q1/10||Q2/10|
|Adj. Fully Taxed EPS||0.29||0.28||0.34||0.35||0.34|
Revenue grew again, hit the top of guidance ($236-246M), and beat the composite analyst number of $243 slightly. Earnings of $0.34 were at the top of guidance ($0.32-0.34) and level with the analyst number. So why is the stock down a couple bucks after hours? Ah, expectations... [EDIT: Barrons reports that foreign exchange headwinds held them back some, as has been the case with others with substantial European revenues in the sector.]
Costs were up, and hence margins retreated back to levels seen in the second quarter of last year - possibly more than some may have expected. We will have to wait for the earnings call to hear whether that reflects increasing competition or investment for future growth.
Certainly though, the rest of the field has adjusted to the new Akamai pricing that was unveiled last fall, and therefore big shifts in the balance of power were unlikely. Right now the CDN space seems to be enjoying an overall expansion, with all players benefiting. I'll revisit that perception when Limelight reports though.
Akamai also appointed David Kenny as President. Mr. Kenny will report to CEO Paul Sagan and will be responsible for leading business operations, including the company’s product groups: global sales, services, and marketing; engineering; and networks and operations. He's not actually a new face though, having served on the company's Board of Directors for the past three years.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Content Distribution · Financials