Earnings Preview: Akamai Technologies

| About: Akamai Technologies, (AKAM)

Akamai Technologies (NASDAQ:AKAM) is expected to report Q3 earnings after the market close on Wednesday, October 28 with a conference call scheduled for 4:30 pm ET.


The consensus estimate is 35c for EPS and $199.40M for revenue, according to First Call. The company had lowered guidance relative to consensus for Q3 on its last earnings call. Guidance for Q3 EPS is 33c-36c on $195M-$203M in revenue.

Analyst Views

As a result of the lower guidance and company's aggressive pricing strategy, many firms had downgraded their ratings back on July 30. Kaufman Bros. Q3 estimates of $195.1M in revenue, $87.3M in EBITDA and 34c in EPS are below consensus and towards the lower-end of management's guidance. With approximately 28% of revenue being derived internationally, Kaufman believes the company could potentially see a $2.8M sequential benefit from a weakening dollar this quarter. Still, Kaufman believes Akamai's current repricing efforts are just beginning, will take several quarters to complete, and could provide unexpected volatility in results over the next few quarters. The recent rally in the shares is the combination of unfounded rumors that the company could be acquired by Google (NASDAQ:GOOG), which Kaufman finds unlikely, as well as the combination of relatively cheap valuation and lackluster estimates. Kaufman recommends investors remain on the sidelines heading into earnings.

Citigroup's fundamental call for Q3 is negative as they are expecting a continued deceleration in Akamai’s revenue growth. Citigroup believes fundamentals are clearly deteriorating due to competitive pressures.