Akamai's 4Q overshadowed by disappointing outlook
Akamai Technologies Inc. ended last year with bang amid rising demand for its Web management services, but expects to get off to a slow start this year.
The cautious outlook accompanying Wednesday's release of Akamai's fourth-quarter results caused the company's shares to plunge more than 11 percent in after-hours trading.
The Cambridge, Mass.-based company $52.5 million, or 27 cents per share, during the final three months of last year. That represented a 31 percent increase from net income of $40.1 million, or 21 cents per share, at the same time in the prior year.
If for certain expenses, Akamai said it would have earned 40 cents per share. Based on that figure, Akamai topped the average estimate of 38 cents per share among analysts surveyed by FactSet.
Revenue for the period totaled $284.7 million, a 19 percent increase from $238.5 million in the previous year. The revenue was about $1 million higher than analysts projected.
But management doesn't expect to fare as well during the first three months of this year. The company forecast revenue of $265 million to $275 million, below the average analyst estimated of $284 million.
Akamai shares shed $5.46, or 11.4 percent, to fall to $42.53 in Wednesday's extended trading. The stock had closed at $47.99, down 11 cents.
The company has benefited from a growing desire to watch video and conduct business on the Web. That trend has been good for Akamai because its software and other tools help to stream video from subscription services such as Netflix Inc. and keep other online traffic flowing.
Akamai rode the increasing demand to top $1 billion in revenue for the first time in its 11-year history.
For all of 2010, Akamai earned $171.2 million, or 90 cents per share, on revenue of $1.02 billion. That compared with net income of $145.9 million, or 78 cents per share, on revenue of $860 million in 2009.
Separately, Yahoo Inc. announced that Akamai President David Kenny will join the board of the web portal, replacing Eric Hippeau.