Feeling rebellious? Who could blame you? Motley Fool Rule Breakers pick Akamai Technologies (NASDAQ:AKAM) reports fourth-quarter and full fiscal 2005 earnings after the bell today.

Wall Street Wisdom:

  • General consensus. Lucky 13? That's how many analysts are covering Akamai today. And the snorting couldn't be louder. Indeed, 10 of these prognosticators are so bullish on the web content delivery specialist that they rate the stock a buy. Three stragglers say hold. None are gutsy enough to say sell. (Which I'd call smart.)
  • Revenues. The Street expects year-over-year sales to advance by a breathtaking 37% for Q4 and by 33% for all of 2005.
  • Earnings. The bottom looks even better, at least so far as analysts are concerned. They are expecting $0.15 per stub for Q4, a 50% improvement year-over-year. Full-year estimates call for $0.50 per share, which would amount to a remarkable 67% gain over 2004.

Margin watch:
Fools shouldn't expect much in the way of margin improvement, however. While Akamai has shown steady progress in this area, its acquisition of rival Speedera brought in customers who spend less monthly. And a hiring spree is likely to continue to crimp operating expenses over the short-term. Long-term, net margin should continue to improve, but last quarter's remarkable bottom line improvement was due to a one-time $255.3 million tax benefit. Expect to see the low 20s for Q4 and the full fiscal year.

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

73.4

76.1

78.1

79.5

80.0

80.4

Op.

13.5

20.1

23.4

25.7

23.2

26.0

Net

2.0

9.6

16.4

20.5

23.2

122.3
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish forensics:
There are three reasons this may prove to be a disappointing quarter for Akamai traders. First, Akamai will finally take a hit on taxes. A big hit. The expected tax rate for Q4 is somewhere in the realm of 40%.

Second, analysts keep raising the benchmark for Akamai. Take sales, for example. During the last earnings call, CEO Paul Sagan said revenue for all of 2005 would come in between $277 and $280 million. Today's consensus estimate is for $279.5 million.

Third, and finally, Akamai diluted existing owners more with a Q3 secondary offering of 12 million shares that brought in $208 million. That's at least 12 million more shares with a claim on earnings.

But remember, I said "traders," not investors. If you're in this stock for long haul, there's likely to be plenty of good news to be had. And just about all of it will be found on the cash flow statement. Indeed, despite the high tax rate, Akamai still has a huge loss reserve to draw down before it starts paying the feds in cash. And its recurring contracts, which now includes Comedy Central's awesome MotherLoad website, should feed the coffers for some time to come. So do yourself a favor, glance at the income statement, take note of the improved balance sheet, and keep your eye square on owner earnings. They'll likely set a new watermark, and it's my belief they'll keep getting better.

Akamai is a Motley Fool Rule Breakers selection. Take arisk-free trialtoday to find out which other stocks are leading David Gardner and his Foolish band of analysts to beat the market by more than 20% as of this writing. Orsubscribeorrenewnow and we'll throw inStocks 2006, which features our analysts' best picks for the year ahead. All you have to lose is the prospect of greater returns.

Fool contributor Tim Beyers owns shares of Akamai. You can find out what else is in his portfolio by checking Tim's Fool profile . The Motley Fool has an ironclad disclosure policy .