Sharp Selloff for Akamai Shares

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Shares of Akamai (AKAM) sold off sharply this morning after an earnings report led several key analysts to downgrade the stock. In early action, shares of Akamai were trading at about $38.50, down $8.68 (18.4 percent) from Wednesday’s closing price of $47.18.

Akamai reported late Wednesday that its second-quarter profit nearly doubled, helped by online video and other bandwidth-intensive servvices. Although the results which matched market expectations, they disappointed some stock watchers who were hoping for an upside surprise. On Thursday morning Akamai was downgraded by Credit Suisse and Jefferies & Co. and Merriman Curhan Ford. Several analysts cited trends in the company’s profit margins.

“We are concerned about the continued slide in Akamai’s gross margin, which seems to be the result of larger customers renewing for longer terms, but at much cheaper prices,” wrote Jefferies & Co. analyst Katherine Egbert, who downgraded shares to “Hold” from “Buy” and lowered her price target to $48 from $55.

About the Author

Rich Miller is the founder and editor-in-chief 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.