1. Akamai reports strong (40%+) YoY revenue and profit growth, in line with or ahead of expectations
2. Analysts predict the end of the company’s growth at the hands of growing competition
3. Akamai reports strong (40%+) YoY revenue and profit growth, in line with or ahead of expectations
Given that this has been going on for a few quarters now, I think we can guess what the investment community’s reaction will be Thursday.
But I’m still holding out hope that some analysts will finally re-consider their doom and gloom mantra, as Akamai’s results for the fourth quarter certainly appeared to snuff out any competition fears. Not only did revenue increase 14% and profit 22% over last quarter (!), but gross margin even increased by 20 basis points. CEO Paul Sagan certainly had every right to brag that “the value of Akamai’s differentiated services is stronger than ever.”
Sagan also reassured investors in this uneasy market climate, insisting that an economic slowdown may even help Akamai. Since companies save money by moving operations to the Internet, Akamai would benefit if the migration process picked up as businesses seek to cut costs in a tougher economic climate, he said.
A large driver of Akamai’s growth is the downloading of video content. The company provides technology that allows companies and government agencies to deliver digital internet content, such as commercials and videos. Between the announcement by Apple (NASDAQ:AAPL) of a movie download service, the internet-only NBC soap opera “Coastal Dreams”, and the proliferation of forwarded video clips in my inbox, the growth of video is one trend you can count on. And given Akamai’s track record and position at the forefront of content delivery technology, this is one company I’m willing to bet on.
Disclosure: SmartGuyStocks is long AKAM