Akamai Technologies Inc. (AKAM): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

By Zacks Investment Research,

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Akamai reported mixed second-quarter 2014 results. Management provided optimistic third-quarter guidance due to strong performance expectation across the product portfolio. However, continuing investments, higher R&D expense and sales force expansion are expected to hurt margins in the near term. However, these investments will help Akamai address the growing traffic needs of customers in the long run. We believe that strong demand for cloud infrastructure solutions, security, mobile products and online video will drive the company's top-line growth going forward. Akamai s partnership with the likes of Microsoft, Cisco, AT&T and IBM, will boost top-line growth over the long term. Moreover, the company's superior content delivery platform, that provides high-quality service at a much lower rate compared to its peers, is a key differentiator. Additionally, the company's dominant position in the web application industry is expected to be a meaningful growth catalyst. However, intense competition has kept pricing under tremendous pressure, particularly in media segment, which is a significant headwind. We maintain our Neutral recommendation and set a price target of $61.00.


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 of 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 customers to operate their web transactions anywhere anytime with cost-effective outsourced infrastructure and carry out predictable, scalable and secure e-business at low cost. 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 world.

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 offerings (Aura).

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% of total revenue in 2013. The company derived 71% of its revenues from the U.S., while the remaining 29% came from its foreign operations.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: AKAM

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