Akamai Grows Revenues, Loses Top Exec

Content Delivery Network provider delivers solid quarterly results and remains optimistic about the future.

By Sean Michael Kerner | Posted Oct 27, 2011
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Akamai Technologies, Inc. (NASDAQ: AKAM), reported third quarter fiscal 2011 earnings on Wednesday, showing once again that their model for content delivery networking and security works.

"Today's enterprises are operating in a world where consumers and workers no longer go online. They simply are online," Akamai CEO Paul Sagan said during the company's earnings call. "We're living and working in a hyper-connected word, and it's changing the way the organizations interact with nearly everyone."

For the quarter, Akamai reported revenue of $281.9 million, which is an 11 percent year-over-year gain. Net Income was reported at $42.3 million ($0.23 per share) up by 6 percent over the third quarter of 2010.

Looking forward, Akamai provided fourth quarter 2011 guidance for revenue in the range of $303 million to $315 million, which would represent a 6 to 11 percent year-over-year gain.

"Online video growth still remains slightly below the expectations we had at the beginning of the year, but we have seen some positive signs as we head into Q4," Akamai CFO J. D. Sherman said during the company's earnings call. "The fourth quarter is generally our strongest seasonal quarter, driven by online retail and advertising, as well as seasonal traffic growth from media and entertainment."

Akamai CEO Sagan noted that Akamai's clients must have 24 by 7 connectivity and downtime is not an option. That's the business that Akamai is in and it's one that he's confident his firm will continue to deliver.

"Over 100 SaaS companies now power their applications using the Akamai platform," Sagan said. "In total, our platform supports the delivery and acceleration of tens of thousands of applications every day."

Akamai also now has partnerships with over 1,000 networks across 75 countries. Sagan noted that Akamai's goal is to continue to build on their partnerships by developing more technology to help network partners optimize their infrastructure to meet the needs of their users.

"If you look at the distribution of over 10,000 ISPs around the world, none of them have very large share of data delivery," Sagan said. "The largest players have single-digit share of global Internet data delivery and so if you are a Web business, you need a solution that's across networks and across geography, and that's what we provide."

While Akamai's business prospects remain strong, there is a bit of a shuffle in the management ranks. David Kenny, who had been serving as President of Akamai announced his resignation from Akamai. Sagan who once held the joint title of CEO and President will now takeover the Kenny's role.

"I kept the old business cards, and I got a big box of them, and I pulled them out already," Sagan remarked.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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