Akamai Technologies Inc.AKAM

Morningstar Rating

Stock Research and Analysis

by Carlton Moore

Akamai was a pioneer in the content-delivery network market and has maintained a dominant position. Demand for CDN services will probably grow in conjunction with the increasing popularity of video and other data-intensive applications on the Internet, Read more

Bulls Say

Advertisers are shifting their budgets to the Internet as consumers spend more time online. Akamai is well positioned to benefit from this trend as advertisers' Web sites become increasingly complex. The firm also has access to user behavior and other types of data which are extremely valuable to advertisers.

Akamai is an ideal buyout candidate for a firm looking to quickly gain the leadership position in the highly specialized CDN industry, which should grow dramatically in the coming years.

Akamai has established a wide customer base of large, multinational corporations such as Microsoft MSFT, IBM IBM, and MTV Networks. Many of these customers will be hesitant to migrate to competitors because their relationships with Akamai are deep and fortified. Read more

Bears Say

Delivering content across a network is now a commodified service. Customers will have no reason to pay premium prices to Akamai as competitors continue to improve their delivery capabilities.

IT managers looking to cut costs can do without Akamai's services. Aside from large media files such as video, many types of content delivery can be handled by enterprises today.

The recent acquisition of data firm Acerno, a foray into the online advertising industry, was a mistake. The new operations will hurt margins, and Akamai would be better off focusing on its core competencies.

Akamai won a $50 million patent lawsuit against Limelight Networks in 2008, but the judge's decision was later reversed. Akamai's intellectual property advantages are crucial to its business, but protecting these advantages has become increasingly difficult. Read more

Strategy

Akamai targets larger business customers that are willing to pay premium prices for multiple services beyond content delivery. It also looks to expand its product portfolio through acquisitions. Read more

Management

Paul Sagan has been CEO since 2005 and with the firm since 1998, holding various positions including COO. Before Akamai, Sagan held senior executive positions at Time Warner TWX and CBS CBS. Sagan took the helm from George Conrades, who is now chairman. Read more

Profile

Akamai Technologies provides infrastructure and technology to improve the delivery of content over the Internet. Through more than 42,000 servers on 950 networks across Read more

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