Foolish Forecast: Please Miss Your Targets, Akamai

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As long as Internet traffic keeps growing faster than the backbone providers lay down new fiber, there's a place for Akamai Technologies (Nasdaq: AKAM). That's pretty much "forever."

When Akamai reports fourth-quarter earnings Wednesday night, it's doing so from a position of strength. The third quarter was a smashing success, and fellow Fool Tim Beyers took a moment to add up Akamai's long-term plans for us back then. "While Amazon.com (Nasdaq: AMZN), AT&T (NYSE: T), and others are pursuing pure content delivery, Akamai is using a bulging balance sheet and rich cash flows to create and acquire new services," Tim said.

The numbers tell a lot of Akamai's story. Have a look at the super-strong profit margins, for example:

	Trailing Margins
Gross	75.6%
Operating	30.7%
Net	18.4%
FCF/Revenue	30.8%

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.

Few companies can boast 30% free cash flow margins amidst a raging economic crisis. But it gets better: Those margins have been actually growing.

I wouldn't worry too much about the competition, either. Akamai has been doing its thing since the beginning stages of the Internet boom and has already figured out solutions to the operating obstacles any competitor would have to overcome on its own. That includes the conundrum of how to turn a solid profit, whatever the weather -- something most of its would-be rivals can't claim:

	Market Cap (Billions)	Trailing P/E Ratio	CAPS Rating (Out of 5)
Akamai	$2.28	16.2	*****
Level 3 Communications (Nasdaq: LVLT)	$1.61	N/A	****
Digital River (Nasdaq: DRIV)	$0.92	15.5	***
Limelight Networks (Nasdaq: LLNW)	$0.25	N/A	**
Internap Network Services (Nasdaq: INAP)	$0.14	N/A	**

CFO J.D. Sherman made sure to set the fourth-quarter bar low. "Online advertising and consumer spending trends are softening while the strengthening dollar also creates a headwind for our international growth," he said in the last earnings call. "Our model has scaled very well as we have grown, and we continue to focus on efficiencies, costs, and expense management. While the near-term picture is less certain, we remain very confident in the long-term prospects for our market and our business."

Indeed. We can't know for sure whether Akamai's order flow hit any kinks this holiday season. So the short term is murky, but the long term is as bright as ever. I'm kind of wishing for an earnings miss this time so we could pick up a few fresh shares on the cheap.

Further Foolishness:

• Stocks the Rich Executives Are Buying
• These Tech Stocks Will Make Tim Beyers Rich
• The Best Investment Values in a Decade