Citi Flies “Big Red Flag” Over Akamai

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Akamai’s (s AKAM) disappointing second-quarter results prompted Citi Investment Research analyst Mark Mahaney to award the company a “Big Red Flag” this morning. Mahaney noted that it’s the first time in at least five years that the content delivery network missed the low end of its revenue guidance. He’s concerned about aggressive pricing, 5 percent-plus customer churn — including at least one big loss during the quarter — and increased competition from other CDNs, especially for media and entertainment customers.

Akamai said after Wednesday’s closing bell that its revenue in the most recent 3-month period rose 5.5 percent, to $204.6 million, and adjusted per-share earnings came in at 40 cents vs. 41 cents in the same quarter last year. Analysts, on average, had expected $211 million in revenue and a per-share adjusted profit of 41 cents. At last check, shares of Akamai had fallen as much as $4.54, or 22 percent, to change hands for $15.86.

Mahaney said that Akamai still has a few things going for it, among them $925 million in cash and securities to buy back stock, the leading market share among CDNs, and the rise of HD video. But he called the company’s latest quarterly results “very sobering.”

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