By Noel Randewich
SAN FRANCISCO, Feb 9 (Reuters) - Internet delivery company Akamai Technologies Inc forecast a first-quarter result below Wall Street's targets as intensifying competition forces it to clamp down on prices.
Shares in Akamai slid nearly 11 percent after the company, which helps Apple Inc and Neflix Inc deliver online content by avoiding congestion on the Web, forecast weaker first-quarter revenue than investors had been expecting.
Akamai recently renewed long-term deals with eight out of 10 major media customers and expects price adjustments to hit revenue in the first quarter, executives said.
Akamai foresaw revenue of $265 million to $275 million in the current quarter, below an average estimate of almost $284 million.
'I think with the high valuation on the stock, any slowdown is a negative,' said Donna Jaegers, an analyst at D.A. Davidson & Co.
'Last quarter we had a strong holiday season in commerce and advertising solutions. As a result, we expect to see a sequential decline in revenues in Q1,' Chief Financial Officer J.D. Sherman told analysts on a conference call.
The outlook overshadowed a solid holiday quarter, boosted by a busy online shopping season.
Akamai reported fourth-quarter earnings and revenue that were slightly better than analysts' estimates. Net income rose to $52.5 million, or 27 cents per share, from $40.1 million, or 21 cents a share in the year ago period.
Excluding items, earnings per share came to 40 cents.
Analysts on average had expected earnings per share of 38 cents according to Thomson Reuters I/B/E/S.
Revenue for the quarter was $284.7 million, versus Wall Street's average forecast for $283.1 million.
Akamai's technology allows media companies to deliver online services by navigating less-congested routes over the Web. Its customers include Apple and Netflix and its services are crucial for delivering high-definition video online.
Shares of Akamai fell 10.8 percent to $42.80 following the earnings report after ending at $47.99 in the regular session on Nasdaq.
(Reporting by Noel Randewich; editing by Carol Bishopric, Gary Hill) Keywords: AKAMAI/ (noel.randewich@thomsonreuters.com; +52 55 5282 7153; Reuters Messaging: noel.randewich.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
SAN FRANCISCO, Feb 9 (Reuters) - Internet delivery company Akamai Technologies Inc forecast a first-quarter result below Wall Street's targets as intensifying competition forces it to clamp down on prices.
Shares in Akamai slid nearly 11 percent after the company, which helps Apple Inc and Neflix Inc deliver online content by avoiding congestion on the Web, forecast weaker first-quarter revenue than investors had been expecting.
Akamai recently renewed long-term deals with eight out of 10 major media customers and expects price adjustments to hit revenue in the first quarter, executives said.
Akamai foresaw revenue of $265 million to $275 million in the current quarter, below an average estimate of almost $284 million.
'I think with the high valuation on the stock, any slowdown is a negative,' said Donna Jaegers, an analyst at D.A. Davidson & Co.
'Last quarter we had a strong holiday season in commerce and advertising solutions. As a result, we expect to see a sequential decline in revenues in Q1,' Chief Financial Officer J.D. Sherman told analysts on a conference call.
The outlook overshadowed a solid holiday quarter, boosted by a busy online shopping season.
Akamai reported fourth-quarter earnings and revenue that were slightly better than analysts' estimates. Net income rose to $52.5 million, or 27 cents per share, from $40.1 million, or 21 cents a share in the year ago period.
Excluding items, earnings per share came to 40 cents.
Analysts on average had expected earnings per share of 38 cents according to Thomson Reuters I/B/E/S.
Revenue for the quarter was $284.7 million, versus Wall Street's average forecast for $283.1 million.
Akamai's technology allows media companies to deliver online services by navigating less-congested routes over the Web. Its customers include Apple and Netflix and its services are crucial for delivering high-definition video online.
Shares of Akamai fell 10.8 percent to $42.80 following the earnings report after ending at $47.99 in the regular session on Nasdaq.
(Reporting by Noel Randewich; editing by Carol Bishopric, Gary Hill) Keywords: AKAMAI/ (noel.randewich@thomsonreuters.com; +52 55 5282 7153; Reuters Messaging: noel.randewich.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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