Limelight Networks Is In Terminal Decline, $1.50 Price Target
Adam Gefvert, CFA
Adam Gefvert, CFA
Limelight Networks Is An Opportunistic Buy
Limelight Networks Is In Terminal Decline, $1.50 Price Target
Adam Gefvert, CFA
Adam Gefvert, CFA
Tue, Jul. 5, 3:00 PM
Fri, Jul. 1, 3:15 PM
- Akamai (AKAM -0.9%) has confirmed it prevailed with a $51M judgment in its long-running dispute against Limelight Networks (LLNW +4.8%) over the '703 patents.
- That amount reflects damages awarded in 2008 by a jury along with interest. A separate case scheduled for trial in January involves another from the same patent family and seeks additional damages for post-2008 infringement.
- "We are extremely pleased after ten years of litigation to have a final judgment entered in Akamai's favor that recognizes Limelight's infringement and the harm it caused," said Aaron Ahola, Akamai's deputy general counsel.
- Limelight claimed a victory of sorts as well, saying it has been allocating "precious resources" to avoid a permanent injunction and back up its belief that damages would be less than requested. The company will reclaim about $12M of a $63M letter of credit held for losses, and take a charge in Q2 for the full $51M damages.
Wed, Jun. 22, 3:00 PM
Wed, Feb. 10, 10:10 AM
- Limelight (NASDAQ:LLNW) has blasted off after posting mixed Q4 results (revenue missed, EPS beat) and issuing in-line 2016 guidance on its earnings call - the CDN owner expects revenue of $180M-$195M and EPS of -$0.05 to $0.05 vs.a consensus of $189.8M and -$0.02.
- Shares went into earnings right at a 52-week low of $0.90, and with Limelight having $73M in cash at the end of Q4, the company's enterprise value is still only $43M.
- Boosting Q4 EPS: GAAP gross margin rose 140 bps Y/Y to 41%, and operating expenses fell 12% to $21.3M. Network traffic fell Q/Q, but ASP rose thanks to a mix shift from gaming clients to streaming clients.
- With concerns about competition from Akamai and internal CDNs (from Apple, Netflix, Facebook, etc.) still looming large, CFO/strategy chief Sajid Malhotra talked up the value of Limelight's CDN. "[W]e operate on a global basis, one of the largest content delivery networks, one of the largest SSL CDNs, one of the largest IPV6 networks ... At almost 50 petabytes, we have one of the broadest cloud storage deployments in the world ... We have unique capabilities that differentiate us from our competitors like the ability to purge files in near real-time and we back this with our SLA and don’t just provide it on a best effort basis."
- Regarding the Akamai suit, CEO Robert Lento insisted Limelight will "continue to vigorously defend against Akamai’s claims in the 703 patent case," in spite of recent setbacks. Limelight has asked a Massachusetts federal curt for a stay of all proceedings until a Supreme Court decides whether to hear Limelight's appeal.
- Akamai is also up sharply post-earnings today, after having delivered a Q4 beat and in-line Q1 guidance.
- Limelight's Q4 results, earnings release
Nov. 23, 2015, 10:00 AM
- Limelight (LLNW -2.4%) will ask the Supreme Court to review a recent appeals court (CAFC) ruling declaring the company guilty of directly infringing a CDN patent owned by bigger rival Akamai (NASDAQ:AKAM).
- The S.C., which only hears a tiny % of appealed cases, previously ruled (in a decision applauded by many tech companies) Limelight couldn't be held liable for inducing infringement of the Akamai patent by its users. However, the CAFC later ruled Limelight's control over its users makes it guilty of direct infringement.
- CEO Bob Lento: "We strongly disagree with the unduly broad standard for direct infringement created by the August 13, 2015 en banc opinion by the Federal Circuit. We are hopeful that the Supreme Court will address this erroneous decision." Limelight is down 50% from the Aug. 12 close, and 20% since the CAFC rejected an appeal of its decision on Nov. 16.
Nov. 16, 2015, 1:21 PM
- A federal appeals court (the CAFC) has denied Limelight's (NASDAQ:LLNW) request for an appeal of an August decision reinstating a $45M infringement verdict granted to Akamai (AKAM +0.4%) in its infringement suit against Limelight.
- Limelight plans to review its options, including a possible appeal to the Supreme Court, which only hears a small portion of appealed cases. The S.C. ruled last year Limelight couldn't be held responsible for inducing infringement by its users. However, the CAFC countered by declaring Limelight's control over its users' actions made it responsible for direct infringement.
- Limelight has fallen to within $0.10 of a 52-week low of $1.78.
Oct. 5, 2015, 3:14 PM
- The Nasdaq is up 1.5% as equity markets display a renewed appetite for risk, and a large number of tech companies are posting 5%+ gains.
- Major gainers include 3D printer makers 3D Systems (DDD +6.8%), Stratasys (SSYS +7.3%), and ExOne (XONE +10.4%), solar microinverter maker Enphase (ENPH +10.7%) and rival SolarEdge (SEDG +6.1%), car-buying site TrueCar (TRUE +10%), defense IT firm Kratos (KTOS +9.5%), online ad software firm Marin Software (MRIN +8.3%), and CDN owner Limelight (LLNW +8.9%).
- Others: IP licensing firm Acacia (ACTG +7.2%), application delivery controller/security hardware vendor A10 Networks (ATEN +8.3%), travel deal site Travelzoo (TZOO +7.5%), home automation tech provider Control4 (CTRL +8.5%), M2M/telematics hardware and services firm CalAmp (CAMP +6.1%), online video hosting platform Brightcove (BCOV +6%).
- 3D printing stocks, hit hard in 2014 and 2015, are reversing the big losses seen last Tuesday. Travelzoo's gains follow last Thursday's CEO change announcement. CalAmp is now up 24% since beating FQ2 estimates and providing in-line FQ3 guidance on Oct. 1.
- Previously covered: Twitter, Cisco, Rackspace, Micron, SunEdison, Vivint, Juniper, CEVA, Knowles, Yandex/Qiwi
Sep. 28, 2015, 3:00 PM
- Plenty of high-beta tech names are getting clobbered as the Nasdaq posts a 3% drop amid a broad market selloff.
- Firms down over 5% include memory giant Micron (MU -5.6%), salvage auction site Liquidity Services (LQDT -10.5%), industrial measurement toolmaker Perceptron (PRCP -12.1%), cloud healthcare software provider Castlight (CSLT -5.4%), CDN owner Limelight (LLNW -8.6%), mortgage origination software firm Ellie Mae (ELLI -6.1%), ultracapacitor maker Maxwell (MXWL -8.5%), Korean analog/mixed-signal chipmaker MagnaChip (MX -9.3%), online loan marketplace LendingTree (TREE -7.9%), and online ad retargeting firm Criteo (CRTO -5.9%).
- Micron's decline comes ahead of its Thursday FQ4 report. Nomura predicted today FQ4 results will miss consensus, and that FQ1 will also be weak. "While an estimate cut is well understood, we believe Micron’s stock will continue to track DRAM/NAND pricing, which is trending lower into the peak of the build season.” Cowen, on the other hand, argued FQ4 will be the bottom, and stated checks point to Samsung "pulling back meaningfully on capex."
- See also: Solar stocks, GoPro, Mindbody, Qorvo
Aug. 13, 2015, 12:45 PM
Aug. 13, 2015, 12:11 PM
- A federal appeals court (the CAFC) has reinstated a $45M infringement verdict against Limelight (NASDAQ:LLNW) in a suit filed by larger rival Akamai (AKAM +0.1%) over the alleged infringement of a patent related to media content delivery.
- The ruling vacates a May decision from the CAFC declaring Limelight didn't directly infringe Akamai's patent. The Supreme Court ruled in 2014 Limelight couldn't be held responsible for inducing infringement by users. However, the CAFC states today Limelight's control over its users makes it responsible for any infringement that occurs.
- Many tech companies have backed Limelight, arguing an Akamai win could open the door to numerous frivolous suits from patent trolls alleging induced infringement. Limelight has tumbled below $3.
Update (12:39PM ET): Limelight is now down 18.6%.
Aug. 4, 2015, 4:02 PM
- Limelight (NASDAQ:LLNW) guided on its earnings call (transcript) for Q3 revenue of $42M-$44M and EPS of -$0.10 to -$0.16. The former is above a $41.4M consensus, but the latter is below a -$0.03 consensus.
- Full-year revenue guidance has been hiked to $170M-$174M from a prior $164M-$170M, putting it above a $168.9M consensus.
- Discussing its Q2 results - revenue beat, but EPS was only in-line - Limelight mentioned it saw a mix shift towards high-volume CDN clients, and that (thanks to the volume discounts given to these clients) it "saw a price compression at a higher than normal rate." This trend is expected to continue for the rest of the year.
- Microsoft could be one of those big clients: Limelight mentioned it's taking part in the Windows 10 launch, which led to a major spike in U.S. Web traffic.
- Q2 results, PR
Jul. 2, 2015, 11:44 AM
Jun. 22, 2015, 12:32 PM
- A combo of Level 3 Communications (LVLT +1.1%) with Limelight Networks (LLNW +0.8%) would create a strong content-delivery rival to Akamai, figures Macquarie's Kevin Smithen.
- Verizon had passed on buying Limelight, choosing instead to go for EdgeCast 1.5 years ago to add 6K customers to its own content-delivery business. But Akamai could see real competition from a "credible second source" of a Level 3/Limelight combo.
- "We continue to believe that value will be created over the long term, either by organic margin expansion driven by 15% to 20% CDN industry revenue growth over the next few years, or by what we feel is a logical combination of Limelight with Level 3's CDN business," Smithen says.
Jun. 9, 2015, 12:11 PM
- Following a lack of Apple streaming TV service announcements at the company's WWDC conference, Macquarie's Kevin Smithen has downgraded Akamai (NASDAQ:AKAM) to Neutral.
- Smithen: "We believe that investor expectations regarding the second half, 2015 revenue benefit to AKAM from an Apple streaming ramp have been rising in recent weeks and we are now expecting that this will be more of a 2016 opportunity for AKAM and the CDN industry, with an emphasis on second half, 2016 ... We do believe that AKAM will carry most of Apple's streaming traffic and that it will see media revenue reacceleration and margin expansion in 2016..."
- He also expects a weak Q2 for the CDN market in general due to "an absence of notable gaming and software launches, tough World Cup soccer comparison, and currency exchange rates." Akamai rival Limelight (LLNW -1%) is off moderately.
- Ahead of WWDC, Re/code reported Apple is holding off on officially announcing its TV service until it can finalize content deals. Meanwhile, Bloomberg reported yesterday Apple is building a fiber network to connect its data centers, and thereby strengthen its internal CDN. Apple has been known for a while to be building a proprietary CDN to handle some of its content delivery; Akamai nonetheless continues to handle a large portion of it.
May 1, 2015, 5:57 PM
- Limelight (NASDAQ:LLNW) rallied to fresh 52-week highs today after beating Q1 estimates and hiking its full-year revenue guidance to $164M-$170M from $156M-$164M (consensus was $161.9M). Q2 revenue guidance of $40M-$42M is above a $39.3M consensus, and full-year EPS guidance of -$0.08 to -$0.18 is mostly above a -$0.17 consensus.
- On its CC (transcript), the CDN owner stated it saw record traffic for the second quarter in a row, after seeing a major 2013/2014 drop caused by declining Netflix demand. Average revenue from top-20 customers (56% of total revenue) is said to be still growing at a "healthy double-digit rate." Price declines are said to be "in-line with [Limelight's] historical averages.
- Lifting EPS: Gross margin rose 190 bps to 39%. GAAP operating expenses rose 9% to $24M. Netflix revenue totaled $4.9M (12% of total revenue).
- Q1 results, PR
May 1, 2015, 9:13 AM
Limelight Networks, Inc. engages in the provision of digital content delivery solutions. Its products include content delivery network, web acceleration, cloud storage, and online video platform. The company was founded by Michael M. Gordon, Nathan F. Raciborski and William H. Rinehart in June... More
Industry: Business Services
Country: United States
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