Strategic Acquisition for Akamai - Analyst Blog
16 Novembre 2012 - 3:15PM
Zacks
Akamai Technologies Inc. (AKAM) has agreed to
acquire Verivue, a provider of IP platforms and solutions for
network operators. The acquisition will enable Akamai to strengthen
its cloud infrastructure solutions portfolio. Akamai expects to
close the deal by the end of this year, but the financial details
were undisclosed.
Verivue’s solutions enable faster delivery of content for
network service providers. Verivue, with its OneVantage Content
Delivery Solution, provides a compact and cost-effective content
delivery network (“CDN”) infrastructure solution for network
providers. Verivue’s global distribution partners include Nokia
Siemens Networks, Ericsson, NISSHO ELECTRONICS and Arris.
Along the same lines, Akamai had acquired FastSoft (in September
2012) and Cotendo (late 2011). We believe that these acquisitions
not only broaden Akamai’s CDN solutions portfolio, but also provide
the company with a significant competitive edge over other
established CDN providers such as Limelight Networks
Inc. (LLNW) and Level 3 Communications
Inc. (LVLT). Akamai can also enjoy competitive advantage
over new entrants like CDNetworks, AT&T Inc.
(T) and Verizon Communications Inc. (VZ).
They will also have a positive effect on Akamai’s cloud
optimization solutions. Cloud infrastructure solutions contributed
approximately 58% of Akamai’s total revenue in the third quarter of
2012. While revenue from cloud infrastructure solutions increased
22.0% year over year, content delivery solutions jumped 23% year
over year driven by increased demand for optimization, performance
and security solutions, and strong traffic growth.
On a positive note, Gartner expects the cloud services market to
grow over 3 times by 2015 to $177.0 billion. According to market
research firm IDC, spending on public cloud services is expected to
reach $100.0 billion by 2016. This tremendous growth potential and
the rapid adoption of cloud technologies will particularly help
Akamai’s enterprise business in the long run.
Akamai has a strong presence in the content delivery market.
However, intense competition has forced it to lower the price of
its content delivery network services, particularly the digital
media services, which will hurt its margins. Moreover, increasing
total bandwidth costs remain a headwind for Akamai in the long
run.
We maintain our Neutral recommendation on Akamai over the long
term (6-12 months). Currently, Akamai has a Zacks #2 Rank, which
implies a short-term Buy rating.
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
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