Akamai Names Leighton CEO After Eight-Month Search
Akamai Technologies Inc. (AKAM) named co- founder Tom Leighton as its next chief executive officer after an eight-month search for a candidate to take the top job.
Leighton, Akamai’s chief scientist, helped create the Internet-services company in 1998. He will assume the role on Jan. 1, when Paul Sagan steps down, according to a statement from Cambridge, Massachusetts-based Akamai.
Sagan, 53, who has been with Akamai for almost 14 years, helped the company become less dependent on a content-delivery network business that was becoming commoditized. Leighton, a former professor at the Massachusetts Institute of Technology, brings a background in “long-term strategic” thinking from his role as chief scientist, said Richard Fetyko, an analyst with Janney Montgomery Scott in New York.
“Most people expected an external CEO to be announced,” Fetyko said. “But it’s a positive for investors because it ensures a smooth transition.”
Sagan, who will become an adviser to Akamai, has added services and products through acquisitions, quadrupling sales to $1.16 billion in 2011 from $283.1 million in 2005.
Leighton said he will continue to invest internally and through acquisitions in three of Akamai’s newest business areas: Web security, network carrier products and cloud computing, which allows companies to store their data remotely and deliver it via the Internet.
“I wouldn’t expect any radical shift in the company,” he said in a phone interview. “Paul and I have worked together 15 years and we’re going to be keeping on that track.”
The company’s independent directors led the CEO search, which began in late April after Sagan said he planned to step down.
“They interviewed many outstanding candidates,” Leighton said. “At the end of the day it’s an honor to be selected.”
The fact that Leighton has no CEO experience shouldn’t be an issue, said Scott Kessler, an analyst with S&P Capital IQ.
“He’s had a C-level position at the company for pretty much that entire period, and in addition to that he’s sat on the company’s board,” Kessler said. “The understanding of the company is unequaled by any individual.”
Akamai gained 1.3 percent to $39.46 at the close in New York. The shares have gained 22 percent this year.
Sagan, a cousin of scientist Carl Sagan, has a background in broadcast journalism. In 1991, while working at Time Warner Inc., he helped design and introduce NY 1 News, the cable network in New York City. Sagan later helped found Road Runner, the first broadband cable-modem service, before joining Akamai in October 1998.
Sagan helped lead Akamai after its co-founder, Daniel Lewin, died aboard American Airlines Flight 11, which crashed into the World Trade Center on Sept. 11, 2001.
In other changes, Bob Hughes will become president of worldwide operations, and Rick McConnell will become president of products and development, according to a separate statement from Akamai. Both are currently Akamai executive vice presidents and will report to the company’s new CEO.
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