Akamai: Lower Profits, Stronger Sales

Third quarter earnings at content distribution provider Akamai Technologies, Inc. (AKAM) were off sharply, due primarily to an extraordinary gain in same quarter last year. Revenue rose 47 percent to $111.5 million from $75.7 million and topped analysts’ forecast for $108.8 million.

Net income was $14 million, or 8 cents per share, compared with $272.3 million, or $1.71 per share, a year earlier. Earnings per share were 2 cents above of the mean estimate of analysts surveyed by Thomson Financial. The 2005 results were inflated by a tax-related gain of $255.3 million. Akamai shares fell $2.13 to $47.70 in after-hours trading.

“We had another exceptionally strong quarter,” said Paul Sagan, president and CEO of Akamai. “We continued to experience healthy demand across our customer base, building on the momentum we achieved during the first half of the year. Key sectors, including media and entertainment, high technology, commerce, and public sector all posted solid results.”

Customers under long-term services contracts at the end of the third quarter increased by 84 to a record 2,144. Sales through resellers and sales outside the United States accounted for 20 percent and 22 percent, respectively, of revenue for the third quarter of 2006.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.