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Wells Fargo defends Akamai, says Apple CDN impact limited

  • Wells Fargo's Gray Powell isn't concerned about the impact of Apple's reported CDN buildout on Akamai (AKAM -3.5%), which is believed to have generated ~$100M in 2013 sales from the tech giant.
  • Powell notes Akamai is already estimated to have recently taken a $24M/year revenue hit from renegotiating its Apple CDN contract, and that the company is expected to generate 2014 revenue of $1.8B.
  • After factoring the impact of the price cut, Apple's reported move might only put ~5% of Akamai's revenue at risk. Moreover, the gross margin on that revenue is likely lower than Akamai's overall gross margin, given it involves basic media delivery services.
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