Why Akamai Shares Got Crushed


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: Shares of Internet content delivery specialist Akamai Technologies plummeted 16% today after the company's quarterly results and guidance disappointed Wall Street.

So what: The company's fourth-quarter profit managed to top estimates, but a top-line miss -- revenue of $378 million versus the consensus of $381.4 million -- coupled with downbeat guidance for the full year is triggering serious concerns over softening demand. Additionally, Akamai's margins remained fairly flat at a time when rivals are seeing their own margins expand, suggesting that its competitive position might also be weakening.

Now what: Management now sees first-quarter revenue of $352 million to $362 million, also below Wall Street's view of $369.8 million. "Throughout the year, we announced new products across every solution line, closed a record number of strategic acquisitions, and achieved margin expansion through continued improvement in our network efficiency," said CEO Tom Leighton. "We believe these efforts have positioned us well to help our customers capitalize on the opportunities, and mitigate the challenges, of conducting business online." Given the long-term cloud computing and Internet video trends still working in Akamai's favor, today's pullback might even be a good opportunity to buy into that bull talk.

Interested in more info on Akamai? Add it to your watchlist.

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The article Why Akamai Shares Got Crushed originally appeared on Fool.com.

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