Bloomberg News

Akamai Shares Jump on Cloud-Computing Profit Boost

July 26, 2012

Akamai Technologies Inc. (AKAM:US), a company that helps businesses deliver data more quickly over the Internet, had its biggest gain in six years after demand for cloud computing bolstered sales and earnings.

Akamai jumped 20 percent to $33.89 at 9:56 a.m. in New York after rising as much as 21 percent, the biggest intraday gain (AKAM:US) since July 27, 2006. The shares had slipped 12 percent this year through yesterday.

Profit excluding some costs was 43 cents a share in the second quarter, Cambridge, Massachusetts-based Akamai said yesterday in a statement. Analysts had estimated 37 cents on average, according to data compiled by Bloomberg. Sales rose to $331.3 million, topping the $326.2 million predicted.

Chief Executive Officer Paul Sagan, who plans to step down by the end of 2013, is making the company less dependent on its content-delivery business, where it faces a crowded field of competitors. To diversify and improve its profit margins, Akamai is adding more cloud-computing services, which help businesses handle tasks such as security and commerce.

“Even in tough economic times, companies are continuing their shift to do more business on the Internet,” Sagan said in an interview. “That’s Akamai’s sweet spot.”

Akamai projected revenue in the third quarter of $332 million to $342 million, beating the average estimate of $331.2 million. Earnings will be 40 cents to 42 cents a share, compared with the 38 cents analysts had predicted.

In Europe, where a credit crisis has hurt orders at other technology companies, Akamai added customers, Sagan said.

“Europe was strong for us,” he said.

Sagan, who has been with the company almost 14 years, is traveling more than ever and has a “tight focus on execution” before the CEO transition. The company has nothing to announce about the search for his replacement, Sagan said.

Net income fell 7.7 percent to $44.2 million, or 24 cents a share, from $47.9 million, or 25 cents, a year earlier.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • AKAM
    (Akamai Technologies Inc)
    • $60.07 USD
    • -0.62
    • -1.03%
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