After posting a larger-than-expected loss for its most recent quarter, Limelight says the current quarter won’t be much better. Why? It’s those pesky picketing writers, who are costing Limelight $1 million this quarter in lost business. And they’ll cost Limelight millions more this year, even though they went back to work last week.
Limelight, which like Akamai makes money by shuttling high-bandwidth digital content around the Internet, said big customers are trimming their online spending until the release of new programming returns to normal.
Interestingly, although the strike began in early November and lasted for most of the most recent quarter, Limelight says it had little negative effect on its earnings during that quarter. But it’s urging Wall Street to revise down their future revenue projections. Limelight, whose shares fell 4 percent Tuesday before the bad news, saw them sink another 15 percent after they reported.
This is quite the contrast from Akamai’s recent report. Akamai said the use of online video was booming last quarter, pushing the company to surprisingly strong profit. Akamai also raised its own estimate for revenue this year to a growth rate of 28 percent.
It’s funny that the writers’ strike is hurting Limelight, but not Akamai. Of course, Akamai could suffer as well, but it’s at least as likely that customers are pulling away from Limelight because of the costly patent lawsuits brought by Akamai and Level 3, not to mention the brutal pricing wars in the CDN market.
Kevin Kelleher is a writer living in the San Francisco Bay Area. He has a regular stock column at TheStreet.com and is a contributor to Wired, Business 2.0 and Popular Science. He has previously worked at Bloomberg News, Wired News and The Industry Standard magazine.