Akamai Tumbles Most in a Year After Posting Narrower Second-Quarter Margin

Akamai Technologies Inc., the largest supplier of software to make online media load faster, slumped 13 percent in Nasdaq trading a day after reporting its profit margin narrowed.

The second-quarter margin before interest, taxes, depreciation and amortization narrowed 2 percentage points from a year earlier to 46 percent, Cambridge, Massachusetts-based Akamai said yesterday in a statement.

The company has worked to win customers from competitors like Level 3 Communications Inc. and Limelight Networks Inc. by cutting rates, according to Dan Rayburn, an analyst at Frost & Sullivan Inc. in New York. Since March, Akamai has handled at least 51 percent of Netflix Inc.’s streaming video traffic, partly on the “cost advantage” it offers, said Steve Swasey, a spokesman for the movie rental company.

Akamai fell $5.68 to $38.35 at 4:30 p.m. New York time on the Nasdaq Stock Market, its largest drop since July 30, 2009. The shares have gained 51 percent this year, the seventh-best performing stock in the Standard & Poor’s 500 Index.

Second-quarter net income rose to $38.1 million, or 20 cents a share, from $36 million, or 19 cents, a year earlier. Excluding some items, profit was 34 cents a share, matching the average of estimates compiled by Bloomberg. Sales gained 20 percent to $245.3 million.

New President

This quarter, profit excluding some items will be 32 cents to 34 cents a share, on revenue of $242 million to $252 million, the company said yesterday on a conference call. Analysts predicted profit of 34 cents a share and sales of $247.2 million.

Ebitda margins in the third quarter will be 45 percent to 46 percent, Chief Financial Officer Donald Sherman said on the call.

“This is slightly below our long-term model, driven by the investments we are making,” Sherman said.

Akamai named David Kenny as president, effective Sept. 7. He will report to Chief Executive Officer Paul Sagan, who has also served as president since 1999.

To contact the reporter on this story: Douglas MacMillan in New York at Dmacmillan3@bloomberg.net.

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