AKAM crashes $9 or 15%
I voted thumbs down on them because I felt growth was no longer accelerating.
In fact, growth remains above 50%, but no upside surprises in the works so they got hammered
In fact, growth remains above 50%, but no upside surprises in the works so they got hammered
posted by Andrew at
8:32 AM
2 Comments:
Do you think AKAM is a good buy at the 47 level for the next 3-6 month holding period?
AKAM's growth last year reflected the deep disconnect between its stock price and the surge in iPod downloading using AKAM back end content delivery services.
I'd break up the question into two parts:
1. Will downloads continue to surge beyond expectations
2. How do AKAM's rates change? For example, if traffice doubles, do they get 2x revenues?
I think the answer to surging growth is - no. But I say that mainly because of the law of big numbers: downloads are huge already. I also think that the video downloads aren't as huge because Apple is really selling mostly non-video iPods like the shuffle. Customers downloading and watching movies/shows for the iPod are not driving a major wave of activity for AKAM.
I also wonder about rates. I am sure that Apple pays more for 1 billion downloads than it does for 500 million. But I am also sure tht they pay at a lower rate. That reduces margins and revenue both.
The numbers reflect the surge and slowing.
One year ago, EPS grew 20% sequentially. Now it's barely 10%. And annual growth is dropping to 35%. The current 45 P/E feels a tad too high for that level of growth.
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