Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Caught Up in the Limelight

When Akamai Technologies (Nasdaq: AKAM  ) competitor Limelight Networksreceived $130 million in private equity funding from Goldman Sachs and others in July, doubts emerged over whether Web content delivery pioneer Akamai, which has been one of the most successful picks in the Motley Fool Rule Breakers portfolio, was more vulnerable than many had once believed.

Expect more skepticism today, with Limelight announcing a new CEO and sales that tripled to $17 million in the third quarter. Jeffrey Lunsford, formerly of digital marketer WebSideStory (Nasdaq: WSSI  ) , will steer the ship as CEO from here on.

The timing could be telling. Now that founding CEO Bill Rinehart has been pushed to the more minor role of "co-founder," Limelight is free to file papers to go public. Why? Rinehart can't be an officer or a director of a public company till at least next summer, when a five-year ban imposed by the SEC expires. (Rinehart accepted the ban while settling fraud charges from his days as sales VP for Critical Path.)

But now that the ban is a non-issue, a prospectus could be mere months away. That probably won't bother Lunsford; he brought WebSideStory public in 2004 and cashed out more than $3 million worth of shares last year, according to SEC filings. It's a good bet that he's looking for a similar, or better, payday from Limelight.

But let's get to the question at hand: Is Limelight, or VitalStream (Nasdaq: VSTH  ) , or InterNAP (Nasdaq: INAP  ) , or anyone profiting at Akamai's expense? The numbers say no. And yet scaremongering blog posts like this persist.

I'll politely disagree with bears and instead point to this recent post on our discussion boards. (For those without a subscription, click here to get one!) I'll briefly summarize. Rivals many indeed be growing in numbers and strength. And it may very well make economic sense for Google (Nasdaq: GOOG  ) , Yahoo! (Nasdaq: YHOO  ) , and others to build out delivery infrastructures capable of packaging content and advertising on the cheap.

But digital media delivery as a market remains very much in its infancy. And for every Google, there's bound to be dozens who would prefer outsourcing. More than enough, I think, for Akamai to become the billion-dollar business that CEO Paul Sagan says he's aiming to build.

Catch a wave of related Foolishness:

Akamaiis one of three Rule Breakers selections to have tripled. Care to find out the names of the other two?Click hereto get 30 days of free access to the service.

Yahoo! is aMotley Fool Stock Advisorpick.

Fool contributor Tim Beyers owns shares of Akamai. Get the skinny on everything Tim is invested in by checking his Fool profile. The Motley Fool's disclosure policy is a rebel with a cause.

Read/Post Comments (0) | Recommend This Article (1)

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.

Compare Brokers

Fool Disclosure

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: 516972, ~/Articles/ArticleHandler.aspx, 10/27/2016 11:34:44 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...

Today's Market

updated Moments ago Sponsored by:
DOW 18,205.26 5.93 0.03%
S&P 500 2,137.38 -2.05 -0.10%
NASD 5,238.32 -11.95 -0.23%

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

10/27/2016 11:18 AM
AKAM $68.81 Up +1.11 +1.64%
Akamai Technologie… CAPS Rating: ****
GOOGL $818.00 Down -4.10 -0.50%
Alphabet (A shares… CAPS Rating: *****
YHOO $41.98 Down -0.10 -0.24%
Yahoo CAPS Rating: **