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Akamai Drops as Marketing, Research Spending Cut Into Margin

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July 31 (Bloomberg) -- Akamai Technologies Inc., which helps speed Internet-data delivery for customers such as Apple Inc. and Sony Corp., slid in late trading as marketing and research costs cut into profitability.

The second-quarter operating profit margin fell to 24 percent from 27 percent in the first quarter and 26 percent a year earlier, Akamai said yesterday in a statement. Income from operations rose to $112 million from $98 million a year earlier, though it was down from $121 million in the period from January through March.

Costs rose for 35 percent for marketing and 56 percent for research, including stock-based compensation expenses. The company is spending to ensure it stands out as more competitors enter the industry and some clients attempt to replace Akamai’s services with their own technology.

Shares of Cambridge, Massachusetts-based Akamai slid 6.1 percent to $57 in extended trading.

Net income rose to $72.9 million, or 40 cents a share, from $61.9 million, or 34 cents, a year earlier. Sales climbed 26 percent to $476 million, compared with the average analysts’ estimate of $473 million. Adjusted earnings of 58 cents a share topped the 55-cent average estimate.

To contact the reporter on this story: Alex Barinka in New York at abarinka2@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Crayton Harrison, John Lear

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