Seeking Alpha

Verizon reportedly buying CDN owner EdgeCast for $350M+

  • TechCrunch reports Verizon (VZ) is acquiring content delivery network (CDN) EdgeCast for $350M+. EdgeCast counts Yahoo, Twitter, Pinterest, and Hulu among its clients, has been profitable for the last four years, and was on a $100M/year revenue run rate as of July.
  • Thus, assuming EdgeCast is still growing, Verizon may be paying just ~3x forward sales. CDN market leader Akamai (AKAM) trades at 4.5x 2014E sales.
  • Acquiring EdgeCast could unravel an enterprise CDN partnership Verizon has with Akamai. With telcos increasingly looking to offer their own CDN services, Akamai has been trying to turn a threat into an opportunity by offering carrier CDN solutions. In addition to Verizon, AT&T and Orange are clients.
  • As for Verizon, the company could leverage its IP infrastructure and sales reach to grow EdgeCast's sales to third-parties, and (perhaps more interestingly) use EdgeCast's network to underpin an expansion of its online/mobile video offerings.
  • This year has already seen Verizon add mobile support for certain FiOS channels, and acquire TV Everywhere encoding tech provider upLynk. The telco has also been reported to be eying the assets of Intel's Web TV unit, with the idea of offering a Web TV service in areas not covered by FiOS.
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Comments (3)
  • BenjaminL
    , contributor
    Comment (1) | Send Message
     
    Would someone smarter than myself like to comment on how this might affect AKAM going forward?
    8 Dec 2013, 08:10 PM Reply Like
  • Tradevestor
    , contributor
    Comments (4159) | Send Message
     
    On the surface, I would assume it would go up.
    8 Dec 2013, 08:19 PM Reply Like
  • SerkanSevim
    , contributor
    Comments (3) | Send Message
     
    Akamai lost a major competition. I don't think Verizon will focus to grow CDN business as good as Edgecast founders.
    8 Dec 2013, 11:28 PM Reply Like
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