Akamai: Shares Tumble on Disappointing In-line Earnings and Guidance

Akamai reported Q1 net income climbed 67% to $19.2 million, or $0.11/share, but excluding certain items, totaled $0.28/share, in-line with Street estimates. Revenues grew 53% to $139.3m, compared to analysts' estimates of $138.8 - $139m. Its shares fell 10.3% to $48.97 during normal trading and last traded down 0.35% to $48.80 in the after-hours, having dropped as low as $46.46 (-5.1%), on volume of more than 1.1m. Analysts noted very high expectations, especially with Akamai beating in the several quarters prior. Akamai forecast Q2 EPS of $0.29 - $0.30, on sales of $149m - $153, compared to analysts' consensus estimate of $0.31 on revenues of $150.3m. In a conference call, Akamai reiterated its full-year revenue growth guidance of 42% - 46% to $610m - $625m. A WR Hambrecht analyst commented: "Everyone is going to downgrade: You have taken all of the expectations out of the stock. When it gets down to around $47, the stock gets interesting again."

Sources: Akamai Technologies Q1 2007 Earnings Call Transcript, Press release, Bloomberg, Reuters
Commentary: Akamai: Cowen Sees “Buying Opportunity” • Akamai: Lift from Online Video Growth
Stocks/ETFs to watch: Akamai Technologies Inc. (AKAM). Competitors: SAVVIS Inc. (SVVS). ETFs: Internet Infrastructure HOLDRs (IIH), First Trust Dow Jones Internet Index (FDN), First Trust NASDAQ-100-Tech Index (QTEC)
Related: Additional Akamai Metrics [pdf]

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