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Akamai's weak current-quarter forecast sends shares down
May 2, 2017 / 8:13 PM / 5 months ago

Akamai's weak current-quarter forecast sends shares down

(Reuters) - Akamai Technologies Inc, which helps speed up content delivery over the internet (OTT), forecast current-quarter revenue and profit below Wall Street estimates, sending its shares down about 11 percent in after-hours trading on Tuesday.

Revenue in Akamai’s media delivery solutions business, which helps customers deliver web content including videos, fell 9 percent to $187.4 million in the first quarter ended March 31.

Akamai, which has more than 200,000 servers in over 1,600 networks in 131 countries, is seeing incremental revenue loss as many of its media customers develop in-house capabilities to handle video traffic.

With media, it is always hard to predict how quickly OTT services will be adopted and how fast traffic will grow in the future, Chief Executive Tom Leighton told Reuters.

“This revenue growth rate was lower than the past several quarters and below our expectations, driven by a moderation of traffic growth throughout the quarter in our Americas region and within our gaming vertical, most notably,” Chief Financial Officer Jim Benson said on a call with analysts.

Revenue in the company’s performance and security division, which offers cloud security products and helps businesses provide internet content at greater speed, rose about nearly 17 percent to $369.2 million in the first quarter.

Revenue from Akamai’s cloud security business, which protects websites and other internet applications from hackers, rose 36 percent in the quarter.

Akamai forecast second-quarter revenue of $597 million-$609 million and adjusted earnings of 59 cents-61 cents per share.

Analysts on average were expecting earnings of 65 cents per share and revenue of $623 million, according to Thomson Reuters I/B/E/S.

Net income rose to $80.9 million, or 46 cents per share, from $74.9 million, or 42 cents per share.

Akamai, however, reported better-than-expected revenue and profit in the first quarter.

Excluding items, the company earned 69 cents per share, beating analysts’ average estimate of 67 cents.

Revenue rose 7.3 percent to $609.2 million, analysts’ on average were expecting $604.7 million.

Akamai’s shares were down 11.2 percent at $55.20 in extended trading on Tuesday.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sriraj Kalluvila and Martina D'Couto

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