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Link: Akamai Reports Record Revenue and Profits
Tue, Jul 27 - Business Wire
REUTERS ABRIDGED BUSINESS SUMMARY
Akamai Technologies, Inc. principally offers e-business infrastructure services and solutions. The Company distributes computing solutions and services that are designed primarily to make the Internet predictable, scalable and secure for customers seeking to conduct business over the Internet. The Akamai EdgePlatform is the foundation of Akamai's business solutions. Built on this platform, the Company's business solutions, the Akamai Solutions extend Web operations anywhere, anytime, and improve insight and management of applications and content through Akamai's EdgeControl technology. The Company offers a range of services, including the EdgeSuite and Edge Computing and related support and services. Its customer base is centered on enterprises, but also includes the government market. During 2003, approximately 16% of the Company's revenue was derived from its operations outside the United States, of which, 13% relate to Europe.
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Below is from "The Motly Fool" http://www.fool.com/News/mft/2004/mft04...it=y&npu=y
By Tim Beyers
July 29, 2004
Yesterday's reaction to Akamai's (Nasdaq: AKAM) earnings report reminds me of a great conversation I had yesterday while flying home. It all started when a saleswoman from Hidden Gems pick CardioDynamics (Nasdaq: CDIC) asked me how the stock market could undervalue her company. I'm afraid my answer wasn't all that reassuring. Stock prices are determined by supply and demand, not valuation, I explained. CardioDynamics may be cheap simply because investors aren't paying attention. And the same may be true for Akamai.
Tuesday evening, Akamai, whose network speeds up the delivery of content over the Internet, reported that revenue grew 5% sequentially to $50.8 million. That's up 35% from $37.8 million in last year's second quarter. Earnings were up 133% sequentially, to $6.8 million from the first quarter's $2.9 million.
Predictably, the good news rattled investors, who punished the stock by more than 5%. Why predictable? Take a look at this chart and tell me it doesn't look like a hyperactive two-year-old on a sugar high jumping on a trampoline. Akamai investors just can't decide when results will finally be good enough.
Indeed, try as we might to avoid it, investing is an emotional experience that Motley Fool Income Investor chief analyst Mathew Emmert says demands emotional discipline. So, when it comes to Akamai, let's focus on the facts.
First, what's bad? Well, for one, Akamai's diluted share count jumped almost 13 million during the quarter. Management said the spike accounts for the potential dilution from its $200 million in 1% notes. Indeed, debt is the firm's biggest problem. Despite recent progress, Akamai still sports $294 million in obligations that cost roughly $7 million in interest each year.
But there's also plenty that looks good. For example, free cash flow should easily cover interest while allowing for further retirement of debt. The company also grew its base of customers under recurring contract by 4% from the March period. During the second quarter, this group spent an average of more than $41,000, up 17% from last year. Management says much of the boost comes from greater overall demand, but a full 30% of recurring revenue is the result of filling customers' unanticipated needs for bandwidth, such as when there's a sudden surge in demand for music downloads. (Apple's (Nasdaq: AAPL) iTunes music store is a customer.)
Call me contrarian, call me nuts, call me a Fool, but I see no cause for alarm in Akamai's report. In fact, I think it provides an important investing lesson we can't repeat enough: If the underlying business conditions that caused you to invest in the first place don't change for the worse, don't sell. It's because of that maxim that I'm still an Akamai owner today.
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Happy Trades,
"Duck"