Will Akamai Ever Be a Multibagger Again?
The following video is part of our "Motley Fool Conversations" series, in which we talk about topics around the investing world. This time, Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova talks about the one number that stood out in Akamai's (NAS: AKAM) mixed earnings report.
The good news? First-quarter financial results came in higher than expected. Revenue improved 16% to $319 million, while adjusted earnings grew 8% to $0.41 a share. Analysts had been expecting $311 million and $0.38, respectively.
If only the story ended there. Instead, new Chief Financial Officer Jim Benson told investors expect lower margins for at least the next several quarters as the company digests the Cotendo and Blaze acquisitions and makes new investments intended to handle increasing data traffic volume on its network. Pricing pressure from cash-conscious customers such as Netflix (NAS: NFLX) also appears to be playing a role. Either way, investors disapproved, and the stock finished the day down more than 14%.
Margins aren't their only complaint. CEO Paul Sagan used earnings day to announce plans to hand over the reins to a still-to-be-named successor by the end of 2013. That's a long transition, to be sure, but the news comes in the wake of other recent executive departures, including former CFO J.D. Sherman and former company President David Kenny.
In an interview, Sagan said he and the board are looking for a seasoned executive capable of leading a large tech company into a new era of growth that -- at least he hopes -- will see Akamai running at $5 billion in annual revenue within a decade. Can it be done? One metric will tell the story. Check out the video for more.
Akamai may not be a Rule Breaker anymore, but there are plenty more multibagger stocks out there waiting for enterprising investors like you. Need an idea? This medical-device manufacturer shows all the signs.
At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. Check out Tim'sWeb home,portfolio holdings, andFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.Motley Fool newsletter serviceshave recommended buying shares of Netflix. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.