Akamai (AKAM) Shares Dip As Profit and Cost Outlook Disappoints

Akamai Technologies Inc. (AKAM) shares dropped 13 percent to $38.56 in morning trade Thursday, the most in the Standard & Poor’s 500 Index, after the company provided in-line Q2 guidance that disappointed heightened investor expectation.

The Cambridge, Massachusetts-based co., which helps media companies accelerate the delivery of online entertainment over the Web, reported earnings in the current quarter, excluding items, of about 32 cents to 34 cents. Wall Street on average expected profit excluding items of 34 cents, according to Thomson Reuters (TRI).

Akamai said its profit margin shrank as it added business from customers like Netflix Inc. (NFLX) at lower prices. The company also said it raised its capital spending forecast for the full fiscal year to 17% of revenue from a previous range of 13 to 16%. Meanwhile, Q2 gross margins came in at 74.3% versus consensus of 72.3%. The co. revenues rose 19.9% year-over-year-basis to $245.3 mln versus the $243.3 mln consensus.

At the end of the second quarter of 2010, Akamai said it had just over $1.1 billion in cash, cash equivalents and marketable securities.

Akamai shares, which have traded between $15.86 and $46.72 over the last 52 week, remain up over 50% year to date despite Thursday’s pullback.

AKAM lost $5.04, or 11.42%, to $39.00 at 12:16 E.T. in Nasdaq composite trading.

Be the first to comment

Leave a Reply

Your email address will not be published.


*