Akamai Technologies (AKAM) is expected to report Q4 earnings after the market close on Wednesday, February 3, with a conference call scheduled for 4:30 pm ET.
Guidance
The consensus estimate is 43c for EPS and $233.44M for revenue, according to First Call. ON Dec. 7, Akamai raised its Q4 guidance to 42-43c in EPS and $230M-$235M in revenue. Akamai CFO JD Sherman said, "The first two months of Q4 tracked above our expectations... We have been seeing stronger volume growth this quarter as compared to the same quarter last year in our commerce and media verticals, and we anticipate this trend will continue through the end of the year."
Analyst Views
Shares of Akamai improved Monday after both Wedbush Morgan and Citigroup upgraded the shares to an Outperform rating on a sustainable margin structure over the next 12-24 months, and confidence in the company's 2010 and longer-term outlook. With the help of strong traffic levels in Q4 and an forex tailwind, Goldman expects the company to come at the high end of its guidance. The firms estimates are $234M and 44c. Goldman has modeled for a stable Q4 cash gross margin at 81.5%. The firms Q4 revenue estimate assumes 35 net new customers vs. 52 in September, and ARPC up 6% year-over-year to about $25,461. Goldman's Q4 revenue estimate assumes $11M of revenue from Acerno, acquired on November 3, 2008. Given the raised Q4 guidance and expectation for near normal seasonality, Goldman believes that competitive pressures in Akamai’s media and high tech verticals have subsided somewhat. Telco activity seems to have slowed for now. Goldman's industry conversations suggest that many telcos are keeping a close eye on the CDN market but that they may not consider it a top priority for entry in 2010. Goldman is modeling Q1 revenue and EPS of $231M and 27c, vs. consensus of $227.84M and 27c. Looking further out, Goldman says that a major tenet of their sell thesis is the belief that the industry remains vulnerable to pricing pressure longer term given limited differentiation and switching costs on core content delivery. This would triangulate to a low double-digit revenue growth and flat operating margins in 2010 for Akamai.
