Author Archives: Scalper1
Akamai Q1: Media Revenue Seen Down But Security Services Up
Akamai Technologies ‘ ( AKAM ) revenue from media and entertainment customers such as Apple ( AAPL ) and Facebook ( FB ) is expected to fall in Q1, but analysts expect a boost from the Internet infrastructure company’s move into security services. Cambridge, Mass.-based Akamai, the biggest provider of content delivery network services, is set to report Q1 earnings after the close Tuesday. Akamai’s global CDN helps Apple, Facebook and other speed up video streaming, e-commerce transactions and business software downloads over the Internet. Apple, though, is among the big tech companies that has been developing its own CDN, while also using other CDN providers. Mark Mahaney, analyst at RBC Capital , is modelling a 3.5% year-over-year decline in sales for Akamai’s media and entertainment business but a 15% rise in cloud-security revenue. “We are looking for $207 million, or a 3.5% (media segment) decline, as two of the company’s largest media customers (likely Apple, Facebook) transition off the Akamai platform. The concern over whether additional top media customers will migrate off Akamai remains the most material overhang on the stock,” Mahaney said in a research report. “Security is becoming an increasingly meaningful part of the financial story, accounting for 12% of revenue in 2015. We are modeling 45% year-over-year growth to $79.8 million.” Akamai competes with Level 3 Communications ( LVLT ), and Limelight Networks ( LLNW ) as well as startups Fastly and CloudFlare. Verizon Communications ( VZ ) ( IBD ), Amazon.com ‘s ( AMZN ) Amazon Web Services, IBM ( IBM ) and Comcast ( CMCSA ) also are emerging as new rivals in some parts of the CDN market. Analysts polled by Thomson Reuters estimate Q1 EPS of $564 million, up 7% from the year-earlier period. Analysts estimate earnings per share minus items of 63 cents, up 3%. Akamai stock is about even in 2016 but down 32% over the past 12 months. Akamai has a low IBD Composite Rating of 50 out of a possible 99. Akamai stock was down a fraction, near 51, in early trading in the stock market today .
Telecom Conglomerate AT&T Q1 Earnings Expected To Get DirecTV Boost
Telecom conglomerate AT&T ’s ( T ) first-quarter EPS is expected to rise 10%, with revenue up 24%, boosted by its acquisition of satellite broadcaster DirecTV last July. AT&T is slated to release earnings after the market close on Tuesday. Analysts expect that like Verizon Communications ( VZ ), which on Thursday reported Q1 revenue below views, AT&T’s results will be affected by fewer upgrades to new mobile phones. That trend improves wireless profit margins but lowers equipment revenue. Excluding AOL, acquired last June, Verizon said its Q1 revenue fell 1.5%, as wireless revenue fell 1.4% to $22 billion. “With installment payment plans becoming the industry norm, nearly 70% of AT&T smartphone subscribers are on unsubsidized plans,” said Jim Breen, an analyst at William Blair, in a research report Monday. “Customers are increasingly waiting longer to upgrade their phones. “This has a negative impact on revenue because AT&T records the entire value of handsets as revenue at the point of sale. We believe that AT&T’s wireless service revenue will be pressured throughout 2016 as more customers are migrated to new (installment payment) plans.” Analysts are looking for an update on AT&T’s success in selling bundles of wireless and video services to current DirecTV subscribers as well as to new customers. Another earnings call topic could be operating synergies with DirecTV. AT&T has been renegotiating programming contracts, lowering per-subscriber costs. DirecTV added 60,000 U.S. subscribers in Q1 2015. That quarter, AT&T added 331,000 postpaid wireless subscribers that are billed monthly, including tablet users, but lost 256,000 postpaid phone lines. AT&T has lost postpaid phone subscribers for five straight quarters amid aggressive promotions by T-Mobile US ( TMUS ) and Sprint ( S ). In Q1, analysts estimate revenue of $40.48 billion, up 24% from the year-earlier period. Analysts polled by Thomson Reuters estimate earnings per share of 69 cents, up 10%. Image provided by Shutterstock .