Akamai reported strong first-quarter results, beating the Zacks
Consensus Estimate on both lines. The company also provided a
positive outlook for the remainder of 2014. We believe that strong
demand for cloud infrastructure solutions, security, mobile
products and online video will drive top-line growth, going
forward. Moreover, the company's dominance in the web application
business is expected to be a significant growth catalyst, going
ahead. However, intense competition has kept pricing under
tremendous pressure, which is a significant headwind. In order to
differentiate its products, Akamai is heavily investing in research
& development and is also expanding its sales force through new
appointments. Although this will boost revenues over the long run,
it will keep margins under pressure in the near term. Thus, we
remain Neutral on the stock and set a price target of $63.00.
Headquartered in Cambridge, MA., Akamai Technologies, Inc.
(AKAM) is a global provider of content delivery network (CDN) and
cloud infrastructure services. The company's solutions accelerate
and improve the delivery of content over the Internet, enabling
faster response to requests for web pages, streaming video &
audio, business applications, etc. Its offerings are intended to
reduce the impact of traffic congestion, bandwidth constraints and
capacity limitations on customers.
The company's solutions allow its customers to operate their web
transactions anywhere anytime with cost-effective outsourced
infrastructure and carry out predictable, scalable and secure
e-business at low costs. These solutions are built on the Akamai
EdgePlatform, which is the technological platform for its business
solutions and hosts some of the world's best-known Internet brand
names, such as iTunes. Akamai's platform comprises more than
141,000 servers located in over 1,200 networks around the
Akamai reported revenues of $1.58 billion in 2013, up 15.3% year
over year. The company offers five core solutions to its customers
namely Terra, Aqua, Sola, Kona and Aura. Through these solutions,
the company provides application and cloud performance services
(Terra), digital media, software distribution and storage services
(Sola), website optimization services (Aqua), security tools
(Kona), network operator solutions and other Internet-based
The company markets and sells its services and solutions both
domestically and internationally through direct sales and more than
100 active channel partners, including AT&T, IBM, Verizon and
Telefonica Group. Resellers accounted for 21.0% of total revenue in
2013. The company derived 71.0% of its revenues from the U.S.,
while the remaining 29.0% came from its foreign operations.
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