Bloomberg News

Akamai Declines on Quarterly Forecast That May Miss Estimates

October 24, 2013

Akamai Technologies Inc. (AKAM:US), a company that helps speed the delivery of Internet data, dropped the most in more than eight months after forecasting profit and sales that may fall below analysts’ estimates.

Akamai fell 11 percent to $46.50 at 10:08 a.m. in New York. Shares of the Cambridge, Massachusetts-based company, which had gained 27 percent through yesterday, dropped as low as $46.20 in today’s session, the biggest intraday decline since February.

Fourth-quarter adjusted earnings will be 49 cents to 53 cents a share, Akamai said yesterday on a conference call. That compares with the 52-cent average estimate of analysts compiled by Bloomberg. Sales were forecast to reach $412 million to $430 million, compared with a $424 million estimate.

Akamai, which helps customers from banks to sports leagues have faster-loading websites and move information online, said it’s counting on strong holiday-season Internet activity to help it reach the high end of its forecast. It reported adjusted third-quarter earnings of 50 cents yesterday, topping the average estimate of 46 cents, on better-than-estimated sales.

Akamai expects one of its largest customers to renegotiate for lower pricing in the coming months, affecting its forecast, the company said. The customer may account for as much as 9 percent of Akamai’s revenue, according to an estimate by Greg Miller, an analyst at Canaccord Genuity Corp. in New York.

“In spite of near-term headwinds from the expected downward repricing of a large media customer contract, we believe the outlook for Akamai remains strong,” Miller said in a report. He recommends buying the shares.

To contact the reporter on this story: Crayton Harrison in New York at tharrison5@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)
    • $64.34 USD
    • -0.25
    • -0.39%
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