Rayburn: CDN Market Remains Strong

Dan Rayburn says the drop in Akamai's stock does not reflect broader weakness in the CDN market.

Rich Miller

July 30, 2007

1 Min Read
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Dan Rayburn, a veteran observer of the online video market, says that he's been getting a flurry of calls from analysts about the sharp downturn in shares of Akamai. The leader in the content delivery network (CDN) market saw its share price drop from $47 to about $37 after its earnings report disappointed analysts. The big question: does the collapse of Akamai (AKAM) shares represent an erosion in business conditions for CDN providers?

"The simple answer is no," Dan responds, noting that analysts are focusing on quarter-to-quarter trends within Akamai's earnings that may not reflect progress in the broader market, or even the full mix of services the company is offering. I think it's also likely that analysts are squinting harder at Akamai's financials in the wake of the IPO by Limelight Networks (LLNW) and the entry of Korea's CDNetworks into the U.S. market. Dan writes:

My suggestion: relax. This is not the first time this has happened where a company that provides services in the online video industry has seen a major change in their stock price and it won't be the last time either. The content delivery market is as healthy as ever and the growth of the consumption of online video for longer time, more frequently, at higher bitrates and on multiple devices shows no signs of slowing down.

Rayburn also critiques a Barron's article over the weekend that highlights the progress of Internap (INAP) in the CDN market.

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