Akamai Gets More Like Google

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

If a pre-market selloff is to be believed, investors found little to like in Akamai’s (Nasdaq: AKAM  ) second-quarter report, issued yesterday after the closing bell. They may be missing the bigger picture. More and more, Akamai is becoming like Google (Nasdaq: GOOG  ) .

More on that in a minute. First, let’s review the numbers:

  • Revenue improved 20% over last year’s second quarter.
  • Normalized net profit per share rose from $0.29 to $0.34 a year ago.
  • Operating cash flow fell 17% on uncollected receivables and higher expenses.
  • Capital expenditures more than doubled as Akamai added more than 22,000 servers to its global network.

In an interview, CEO Paul Sagan said the outsized expenses were necessary to support the delivery of high-definition broadcasts of World Cup soccer. At the height of the event, Akamai delivered 1.6 million concurrent streams to Web-connected fans.

Think of that as the equivalent of 1.6 million people watching soccer on high-def TV simultaneously, then substitute a computer and Web browser for the tube, and you’ll get a better understanding of the load Akamai’s network was carrying.

Sagan also confirmed that Akamai now gets more than half of its revenue from value-added services related to cloud computing, e-commerce, and advertising. New company President David Kenny will run point on those services.

They’re important to Akamai’s future. Sagan said that value-added services “have great customer loyalty and very good economics.” Who wants to bet advertising has the best economics of the three?

We have plenty of ancillary evidence. Consider Microsoft (Nasdaq: MSFT  ) and Apple (Nasdaq: AAPL  ) , neither of which was interested in advertising before Google made billions from it. Now they’re all-in. Twitter and Facebook, too, depend on ads.

Maybe it’s unfair to lump Akamai in with this group. But Kenny, a company director who at one time was CEO of Publicis Groupe division Digitas, has street cred on Madison Avenue. He has relationships with the big firms that make ad buys, and we know Akamai wants those ads on its network.

That’s why the comparison to Google works. Like The Big G, Akamai wants a massive slice of advertising pie. In his new role, Kenny wields the cutter.

But that’s my take. Now it’s your turn to weigh in. Is Akamai behaving like Google? As an investor, does that scare you or thrill you? Let the discussion begin in the comments box below.

Apple is a Motley Fool Stock Advisor selection. Microsoft is a Motley Fool Inside Value pick. Akamai and Google are Motley Fool Rule Breakers recommendations. Try any of our Foolish newsletter services, free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple and stock positions in Akamai and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool owns shares of Google and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has surprising speed and quickness for a disclosure policy its size.

Read/Post Comments (0) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1251193, ~/Articles/ArticleHandler.aspx, 12/1/2015 12:45:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Tim Beyers

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at or send email to For more insights, follow Tim on Google+ and Twitter.

Today's Market

updated 2 hours ago Sponsored by:
DOW 17,719.92 -78.57 -0.44%
S&P 500 2,080.41 -9.70 -0.46%
NASD 5,108.67 -18.86 -0.37%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

11/30/2015 4:00 PM
AAPL $118.30 Up +0.49 +0.42%
Apple CAPS Rating: ****
AKAM $57.61 Down -0.29 -0.50%
Akamai Technologie… CAPS Rating: ****
GOOGL $762.85 Down -9.12 -1.18%
Alphabet (A shares… CAPS Rating: ****
MSFT $54.35 Up +0.42 +0.78%
Microsoft CAPS Rating: ***