Akamai Technologies Shares Plunged: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Akamai Technologies (NAS: AKAM) dropped 20% in intraday trading today after reporting disappointing earnings and guidance.

So what: Second quarter non-GAAP EPS of $0.35 increased 3% year over year but fell short of the $0.37 consensus estimate. Revenue increased 13% to $277 million, just shy of the consensus forecast of $277.8 million. A tax rate of 35%, rather than the expected 32% to 33%, was a drag on earnings.

Now what: Management guided second quarter non-GAAP EPS to $0.31 to $0.34 and revenue to $273 million to $283 million. Both fell short of consensus expectations of non-GAAP EPS of $0.38 and revenue of $288.7 million. Management vowed on its earnings call that it was determined to improve performance, but competition from Limelight Networks (NAS: LLNW) and Level 3 Communications (NAS: LVLT) is pressuring pricing and thus profits.

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At the time thisarticle was published Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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