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Akamai Says M&A, Stock Buyback Both Do-able

Akamai Technologies ( AKAM ) is sticking with its revenue target of $5 billion by 2020-21. At its investor day on Monday, the company said that it has enough cash to pursue stock repurchases as well as acquisitions. “We could do both — M&A or share buybacks,” said Akamai CFO Jim Benson. He said that Akamai has about $1.5 billion in cash. Akamai did not change Q1 guidance calling for profit in a range of 61 cents to 64 cents per share and revenue of $562 million at its midpoint, up 7% from $526.5 million a year earlier. Akamai’s 2015 revenue rose 12% to $2.2 billion. “Although Akamai expects a lower overall growth rate for 2016, management is maintaining its long-term revenue goal of $5 billion by 2020, which implies a CAGR (compound annual growth rate) of 18%,” said Jim Breen, a William Blair analyst, in a report. Cambridge, Mass.-based Akamai is the biggest provider of content delivery network services to media and entertainment companies. Akamai’s CDN technology speeds up e-commerce transactions, business software downloads and video streaming to mobile devices. Akamai has expanded into higher-margin cloud infrastructure services and security, aiming to offset price cuts in the CDN business that averages 15% to 20% a year. At the investor day in Boston, Akamai said that it expects to grow sales overseas as well as to corporate customers. “The media business was de-emphasized relative to last year and is beginning to be overshadowed by the performance and security businesses,” said Michael Bowen, an analyst at Pacific Crest Securities, in a report. Akamai’s stock is up about 4% in 2016. It has an IBD Composite Rating of 59 out of a possible 99. Akamai competes with Limelight Networks ( LLNW ) and Level 3 Communications ( LVLT ) as well as Verizon Communications ( VZ ). Verizon carries a high Composite Rating of 98 and makes  IBD’s Big Cap 20 weekly screen of large-cap growth stocks.

Box Seen Narrowing Fiscal Q4 Loss But Remains Deeply In Red

Box ( BOX ), the cloud storage firm whose stock has disappointed since its IPO in January 2015, is expected to remain far from profitability but to narrow its losses, when it reports its fiscal Q4 results after the close Wednesday. Analysts polled by Thomson Reuters expect revenue for the period ended Jan. 30 to soar 31% to $81.8 million, with Box’s per-share loss minus items easing to 29 cents from 37 cents in the year-earlier period. Shares of the online data storage and file-sharing service provider are down more than 10% in 2016, though they traded 0.4% higher midday in the stock market today , near 12.60, and are up nearly 40% since touching an all-time low of 8.96 on Feb. 9. Box has a relatively low IBD Composite Rating of 23. The company is part of IBD’s Internet-Network Solutions group, which ranks No. 120 out of 197 industry groups. Gigamon ( GIMO ) leads the group with a Composite Rating of 89. Box said it had 54,000 paying customers as of Oct. 31, up from 50,000 in the July quarter. Box also says that its paying business customers include 55% of the Fortune 500. Box competes with Microsoft ( MSFT ), Google owner Alphabet ( GOOGL ), startup Dropbox and Amazon.com ‘s ( AMZN ) cloud-based “Zocalo” enterprise document storage service. Under its freemium business model, Box also provides consumers with free personal data storage accounts. Box says that it had 41 million total users as of Oct. 31.

Square Set For First Earnings Report; Square Capital A Focal Point

Payments processor and digital cash register maker Square ( SQ ) is set to release its first earnings report since its November IPO after the close Wednesday, with analysts keen to see results from its Square Capital and Square Cash operations. The fourth-quarter report could be better than expected, RBC Capital Markets analyst Daniel Perlin said in a research note Monday. Analysts polled by Thomson Reuters expect Q4 revenue to clock a 37% year-on-year gain to $343 million, with a per-share loss minus items of 13 cents, compared with an 11-cent loss a year earlier. Square produces a line of digital cash registers and credit card readers targeting smaller businesses. It also processes the payments on these devices. Square has branched out to marketing and financial services — such as payroll — and offers short-term cash advances based on the transaction data it collects. RBC’s Perlin expects a 14% sequential increase in software and data revenue, driven by Square Capital, the company’s financial services business. “Arguably one of the more important drivers to total revenue growth, Square Capital will be a key focal point on the earnings call, as management has devoted considerable resources to the growth of this business,” Perlin wrote. Perlin expects a lofty 140% increase in hardware sales, saying demand for the company’s credit card chip readers has been strong. Square also has a peer-to-peer payments app called Square Cash that competes with payments giant PayPal ( PYPL ) and its P2P app, Venmo. Both are said to be popular with millennials, the coveted young-adult demographic. Perlin has a price target of 15 on Square stock, which was down 2% in morning trading in the stock market today , near 12. Square priced its IPO at 9, peaking its first day on the market, at 14.78. Shares touched a two-month high of 12.65 last week. The company has a weak IBD Composite Rating of 46, where 99 is the highest.