We updated our research report on Akamai Technologies, Inc. AKAM on Jun 30.
Akamai’s first-quarter 2015 earnings lagged the Zacks Consensus Estimate while revenues came in line with the same.
The company is a leading provider of content delivery network (CDN) services as its platform handles approximately two trillion web interactions on a daily basis. We believe that strong demand for cloud infrastructure solutions, security, mobile products and online video are significant positives for the company. The company’s cloud optimization solutions aid organizations to enhance performance and increase availability and security of applications and other key web assets that are delivered from data-centers to the end user. Since a large portion of its revenues is recurring in nature, the company is expected to boost its sales force as well as investments by developing new products
Recently, the company released its 'First Quarter, 2015 State of the Internet Report'. Akamai, with this report, offers an insight into prime statistics pertaining to the use of Internet across the world, including, connection speeds, broadband adoption and IPv4 exhaustion as well as IPv6 implementation.
Also, Akamai has benefited from its past acquisitions & partnerships. Its partnerships with the likes of Microsoft Corporation MSFT, Cisco Systems, Inc. CSCO, AT&T, Inc. T and IBM, are expected to generate financial synergies over the long term. In Jun 2015, Akamai Technologies also collaborated with ‘Girls Who Code’, a national non-profit organization that enables girls to acquire computing skills required in a modern economy.
However, intense competition has kept pricing under tremendous pressure, particularly in the media segment, which is a significant headwind. Additionally, stiff competition has forced the company to lower the price of its CDN services, primarily in the media segment despite increasing bandwidth costs. Such setbacks are weighing on the company’s financials.
Akamai currently has a Zacks Rank #3 (Hold).
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