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Akamai Revenue Guidance Light Amid Concern Over Apple, Facebook

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.

Yahoo To Add 4 Independent Directors In Deal With Starboard

Yahoo ( YHOO ) has reached a deal with Starboard Value to name four independent directors  while the hedge fund ends its bid to replace the entire board of the ailing web giant. Under the terms of the agreement, Starboard has withdrawn its Yahoo board nominees. Former Deutsche Bank Securities M&A head Tor Braham, media exec Eddy Hartenstein, Tessera Technologies ( TSRA ) chairman Richard Hill, and Starboard CEO and Chief Investment Officer Jeffrey Smith will become board members, effectively immediately, said Yahoo in a statement. Current directors Lee Scott and Sue James will not stand for re-election at the company’s annual meeting to allow for an 11-member board. “This constructive resolution will allow management and the board to keep our focus on our extremely important objectives,” said Yahoo CEO Marissa Mayer in the statement. Starboard had late last year pressured the Internet heavyweight to nix its Alibaba ( BABA ) spinoff, then in March issued a letter to Yahoo shareholders, telling them it was “extremely disappointed” with the company’s “dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the Board.” Under pressure from Starboard, Yahoo has accepted bids for all or part of the company. Verizon ( VZ ) is seen as a lead suitor in the first round of bids. Yahoo stock fell fractionally soon after the opening bell on the stock market today . Separately,  Marvell Technology ( MRVL ) agreed to add five directors, giving in to demands from Starboard Value. Starboard took a 6.7% stake in Marvell in February. Marvell Technology stock rose 1.4% to 10.10.

AT&T Postpaid Phone Subscriber Losing Streak Hits Six Quarters

Telecom conglomerate AT&T ( T ) reported Q1 earnings late Tuesday that topped expectations and in-line revenue, as it had a net loss of postpaid phone subscribers — those billed monthly — for the sixth quarter in a row amid fierce wireless competition. AT&T lost 363,000 postpaid phone customers, who are considered more lucrative than prepaid customers who buy minutes as needed. AT&T stock was down 1% in premarket trading Wednesday. T-Mobile US ( TMUS ) on Monday said it added  877,000 postpaid phone lines in Q1, while Verizon Communications ( VZ ) on Thursday reported a loss of 8,000. “AT&T has been a share donor for six consecutive quarters in postpaid handsets, which have by far the highest customer lifetime value,” said Paul de Sa, analyst at Bernstein Research, in a research note. Including tablet users, AT&T added 129,000 postpaid subscribers overall, also below Wall Street estimates. AT&T has focused on selling consumers  product bundles of wireless and DirecTV video services. T-Mobile, meanwhile, has thrived with its Uncarrier-branded promotions, while Sprint ( S ) continues to compete aggressively on price, analysts say. Sprint had been losing postpaid phone subscribers for several years before recently reversing the trend. “Postpaid net adds came in light at 129,000 as AT&T simply refuses to aggressively compete and instead focus on profitability and other areas of the business,” said Colby Synesael, analyst at Cowen & Co., in a report. AT&T said Q1 earnings rose 11% to 72 cents per share, excluding items, topping analysts’ estimate of 69 cents. Including the acquisition of satellite broadcaster DirecTV, AT&T said revenue rose 24% to $40.53 billion, in line with views. AT&T said it lost 382,000 landline  U-verse TV customers while DirecTV gained 328,000, up from 60,000 in the year-earlier period. AT&T had a net loss of 54,000 video subscribers in the March quarter.