Akamai Plunges After Earnings, Sales Forecast Miss Estimatesby
Top technology customers taking more business in-house
Pacific Crest Securities analyst downgrades stock rating
Akamai Technologies, Inc. plunged as much as 13 percent in early trading Wednesday after forecasting earnings and sales in the current quarter that fell short of analysts’ estimates.
The Cambridge, Massachusetts-based company, whose technology helps speed delivery of internet content said its biggest technology customers, like Apple Inc. and Facebook Inc., are turning to a do-it-yourself model and are increasingly capable of moving more data through their own systems.
“As these customers deliver more of their content themselves, it has meant less revenue for Akamai,” Chief Executive Officer Tom Leighton said on a conference call Tuesday following the results.
Along with Apple and Facebook, Google, Microsoft Corp. and Netflix Inc. together made up less than 11 percent of Akamai’s second-quarter revenue, down from 18 percent last year, Leighton said.
Akamai shares fell to as low as $50.50 in early trading. They were up 10 percent this year through the close Tuesday.
The company said third-quarter earnings excluding some costs would be 59 cents to 62 cents a share, well below analysts’ forecasts for 66 cents. Revenue in the period is projected to be $566 million to $578 million, compared with the average analyst estimate of $590.9 million.
Michael Bowen, an analyst at Pacific Crest Securities, downgraded his rating on the stock to the equivalent of hold.