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Akamai Technologies ( AKAM ) late Tuesday reported Q1 earnings and revenue that topped expectations, though its current-quarter revenue guidance slightly missed Wall Street expectations. Still, Akamai stock was up 7.5% in early trading in the stock market today , touching a four-month high of 57.50. Cambridge, Mass.-based Akamai is the biggest provider of content delivery network (CDN) services. Worries that customers such as Apple ( AAPL ) and Facebook ( FB ) are shifting some of their data traffic to their own CDNs has pressured Akamai stock, and analysts have lowered Q1 estimates. Akamai said Q1 EPS ex items rose 8% to 66 cents per share, with revenue also rising 8% to $567.7 million. Analysts polled by Thomson Reuters had modeled 63 cents and $564 million. For Q2, Akamai forecasts revenue of $574 million at its midpoint of guidance and adjusted profit of 62 cents to 65 cents per share vs. consensus estimates of $578.4 million and 65 cents. “Revenue guidance is slightly under consensus, due to year-over-year decline in revenue from two major media delivery customers (Apple and Facebook) that are taking more of their volume in-house,” Michael Olson, a Piper Jaffray analyst, said in a research report. “Importantly, the impact from these customers is becoming less material as they go from 11% of revenue in 2015 to around 6% in 2016.” Colby Synesael, an analyst at Cowen & Co., says Akamai’s guidance might be too conservative. “While we appreciate management’s decision to err on the side of being overly cautious after its surprising revelation regarding these two customers on its Q3 (2015) call, it highlights management’s lack of visibility with its own top customers,” he said in a report. Akamai competes with Level 3 Communications ( LVLT ) and Limelight Networks ( LLNW ), as well as startups Fastly and CloudFlare. Verizon Communications ( VZ ), Amazon.com ‘s ( AMZN ) Amazon Web Services, IBM ( IBM ) and Comcast ( CMCSA ) are also emerging as new rivals in some parts of the CDN market. “Akamai has been very clear that the first half of 2016 would be marked by slower growth in the media segment, but then it expects (Internet TV) video to begin to accelerate growth. Similar to other large, secular growth opportunities, it is often difficult to project the exact timing of the opportunity, but we believe growth from (Internet TV) will begin to manifest in second half 2016,” said Michael Bowen, an analyst at Pacific Crest Securities, in a report. Scalper1 News
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