Initially higher AH in response to its Q3 beat, Akamai (AKAM) has sold off after guiding on its CC for Q4 revenue of $412M-$430M and EPS of $0.49-$0.53; the midpoints of those ranges are below a consensus of $423.8M and $0.52.
Akamai partly blames the guidance on e-commerce-related weakness - eBay recently stated Q4 U.S. demand could be soft, but then backtracked a bit - and negotiations with a major media client. The company in question could be Netflix, which has been moving traffic to its Open Connect CDN.
Separately, Akamai has announced a new $750M buyback program, good for repurchasing 8.7% of shares at currently levels. The program replaces one that was used to buy back $30M worth of shares in Q3.
Limelight's (LLNW -9.5%) Q2 revenue fell 4% Y/Y. Akamai's (AKAM -0.2%) revenue rose 14% Y/Y in Q2 (fueled by 19% growth for its value-added performance & security business), and Level 3's (LVLT +1.1%) CDN revenue rose 30%.
Limelight says near-term results could be affected by a decision to abandon "contracts that do not provide long-term economic value."
On the CC, Limelight stated its CDN revenue fell 9% Q/Q and 10% Y/Y, thanks in part to the end of a reseller contract with Global Crossing a year ago, and lower prices.
Core CDN revenue rose 1% Y/Y but fell Q/Q, something Limelight blames on "decreases in traffic amongst some of our top accounts." Netflix, which is migrating traffic to its Open Connect CDN, is one of those accounts. However, Limelight adds its deal with Netflix (previously set to expire in 2013) has been extended to 2014.
Opex down fractionally Y/Y to $26.2M. Sales/marketing spend down, R&D and G&A spend up.
Cash/equivalents stood at $119M at the end of Q2, -$1M Q/Q.
Akamai (AKAM) guides on its Q2 call (webcast) for revenue of $380M-$392M and EPS of $0.44-$0.47 vs. a consensus of $385.2M and $0.47. Much like Akamai's Q2 results, the numbers reflect both solid top-line growth and the margin pressure caused by growing sales/marketing spend (+20% Y/Y in Q2). Shares +0.3% AH. (PR)