Akamai Bets On Future Growth From Service Providers With Verivue Buy

Nov.16.12 | About: Akamai Technologies, (AKAM)

By Tejas Venkatesh

In its quarterly results three weeks ago, Akamai (NASDAQ:AKAM) reported impressive numbers driven by the media and entertainment vertical. Its acquisition of Verivue, a video-switching and delivery platform provider, signals a new path for continued growth in the segment.

Even though Akamai has been developing a licensed software solution for the service-provider market, the acquisition of Verivue's technology (and engineering staff) helps get Akamai further along by virtue of having already been deployed in the field with companies like Cox Communications in the U.S. and some smaller ISPs in the Asia-Pacific region.

Terms of the deal were not disclosed. Six-year-old Verivue has 60 employees and raised quite a bit of venture capital. Five venture firms and three strategic investors together funneled $85 million into Verivue. Investors include Accel Partners, Matrix Partners, and Comcast, among others.

The acquisition comes barely three weeks after Akamai reported its best quarterly results ever, with its top line increasing 23% year over year to reach $345 million. Revenue from the media and entertainment segment grew fastest at 26%, driven in part by the Olympic games, when broadcasters used Akamai’s HD network to deliver high-quality video at scale.