Legal Setback Steals Akamai's Limelight

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Kiss $45 million goodbye, Akamai (Nasdaq: AKAM  ) .

On Friday, a district court judge in Massachusetts overturned the Web content delivery specialist's 2008 patent infringement victory over Limelight Networks (Nasdaq: LLNW  ) , voiding a $45 million jury award for damages. Akamai, not surprisingly, has already promised to appeal.

And yet investors don't seem to care. On a down market day in which swine flu fears flooded the headlines and a surprise flyover of New York City by an Air Force One lookalike rattled nerves in lower Manhattan, shares of Akamai, a Motley Fool Rule Breakers recommendation, rose nearly 2%. Weird.

Or is it? After last year's victory, shares of Akamai fell 6% in the three days following the court's decision. Yesterday's buying follows the same Costanzian strategy, a la Seinfeld's George Costanza, to always do the opposite. Here, investors are buying on not just bad news, but awful news.

How awful? Friday's ruling opens the door to more competition by diluting the effectiveness of Akamai's most critical patent, held in conjunction with the Massachusetts Institute of Technology.

Akamai already faces direct rivals in Limelight and Level 3 Communications (Nasdaq: LVLT  ) as well as privately held upstarts such as EdgeCast and BitGravity. Other would-be squatters include (Nasdaq: AMZN  ) , AT&T (NYSE: T  ) , and Cisco (Nasdaq: CSCO  ) .

For years, they've been trying and mostly failing to unseat Akamai. Friday's ruling -- if upheld -- would give them a needed boost.

Get your clicks with related Foolishness:

Amazon is a Stock Advisor selection. Akamai is a Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers owned shares of Akamai 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 is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is a fact-checking machine.

Read/Post Comments (0) | Recommend This Article (4)

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: 885795, ~/Articles/ArticleHandler.aspx, 10/26/2016 2:03:52 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 4 hours ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

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

10/25/2016 4:00 PM
AKAM $59.07 Up +0.23 +0.39%
Akamai Technologie… CAPS Rating: ****
LLNW $1.89 Down -0.10 -5.03%
Limelight Networks CAPS Rating: **
AMZN $835.18 Down -2.91 -0.35% CAPS Rating: ****
CSCO $30.34 Down -0.12 -0.39%
Cisco Systems CAPS Rating: ****
LVLT $46.90 Down -0.47 -0.99%
Level 3 Communicat… CAPS Rating: ***
T $36.70 Down -0.16 -0.43%
AT and T CAPS Rating: ****