Akamai's Strategic Expansion - Analyst Blog
05 Ottobre 2012 - 4:00PM
Zacks
With the growing demand for
Akamai Technologies Inc.’s (AKAM) cloud based
services in the Latin American countries, the company is opening a
new services and support center in Costa Rica. Through this
initiative the company will deliver its cloud infrastructure
solutions.
Expansionary initiatives to cater
to Argentina, Brazil, Chile, Colombia, Mexico and Peru bode well
for the company’s long-term prospects as these countries have
recorded a steady growth in online usage in recent times. Brazil
and Mexico accounted for the highest online usage. Market research
firm Gartner expects IT spending in Brazil and Mexico to exceed
$140 billion and $56 billion in 2012, respectively. Moreover,
Gartner expects Latin America to generate approximately $326
billion in IT spending this year.
Akamai’s cloud infrastructure
solutions have been seeing robust demand. In the last concluded
quarter, this segment comprised 58% of its total revenue, an
increase of 22% on a year-over-year basis.
According to Gartner, the global
cloud services market is expected to grow 19.6% in 2012 to $109.0
billion. Moreover, the cloud management and security services
segment is estimated to reach $3.3 billion in 2012. Gartner expects
Argentina, Mexico and Brazil to be some of the strongest markets
this year. This tremendous growth potential will benefit Akamai,
especially in the enterprise segment where cloud technologies are
being adopted rapidly.
However, Akamai has been facing
margin contraction due to competition from companies such as
Level 3 Communications Inc. (LVLT),
Limelight Networks, Inc. (LLNW) and carriers such
as AT&T Inc. (T) and Verizon
Communications Inc. (VZ), who are developing their own
content delivery network.
Nonetheless, we believe that strong
demand for cloud infrastructure solutions, security and mobile
products, online video, aggressive share repurchase and strategic
partnerships are positives for the stock over the long term.
Moreover, the company’s strategic acquisitions would act as a
positive catalyst going forward.
Thus, we maintain our Neutral
recommendation on a long-term basis (6-12 months). Currently,
Akamai has a Zacks #2 Rank, which implies a Buy rating on a
short-term basis.
AKAMAI TECH (AKAM): Free Stock Analysis Report
LIMELIGHT NETWK (LLNW): Free Stock Analysis Report
LEVEL 3 COMM (LVLT): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Grafico Azioni Limelight Networks (NASDAQ:LLNW)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Limelight Networks (NASDAQ:LLNW)
Storico
Da Lug 2023 a Lug 2024