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Akamai Technologies, Inc.
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By TheSmay
November 1, 2006

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This seems to be the major theme lately on this board, with investors having no clue as to why AKAM is valued the way it is or if the share price is justified. There is simply no straight answer to this. I had a discussion with a poster a little while back and tried to explain similar action in the early 90's with companies who were dominant in their space and on paper were extremely overvalued:

http://boards.fool.com/Message.asp?mid=24700541

The facts are, there's absolutely no way of knowing if lightning will strike twice or if AKAM is even in the same class as CSCO or MSFT. The early indications are that they are right on track to become the next technology behemoth with over 50% of a market which looks to be growing ridiculously with no end in sight.

The one poster mentioned how sooner or later the growth will catch up to them and begin to show signs of weakness, absolutely true. There's actually a theory behind this called the law of large numbers. Basically a company cannot keep growth rates going forever as revenues soar to, what seemed at one time, unattainable heights. These companies are well documented in technology, ORCL, INTC, CSCO, even DELL. At one time the sky was the limit for these companies as there was no end in sight for growth. Telecom buildout was going to last forever, or at least we were told, it was going to take 100 years before everyone who wanted a computer got one, obviously exaggerated. Once these companies started posting revs in the billions quarterly, there was no way they could keep growing at 25 to 30%, their numbers were just too big. Is AKAM going to be the next CSCO? I have no way of knowing and anyone who says otherwise is plain guessing. But trying to place a certain value to a company in the position of AKAM would be guessing as well.

The other issue that seems to come up a lot is when do I sell or when do I buy. The stock is too pricey or it's a bargain at this price. That's something each of us has to answer on our own. We all have different risk tolerances and we all have different objectives. There is no right or wrong answer; it's up to the individual to decide what they are comfortable with. I have never recommended buying or selling this stock, while everyone knows I've been in it since below a dollar and knows I continue to hold, I have mainly been here for company and industry discussion. And while I don't always agree with everything that is written, I appreciate the discourse and always look forward to hearing many different points of view. One should always look for and listen to others and never take their investment for granted. I'm not saying you should act at the drop of a hat, but in situations like this one it is very easy to get complacent and not think with a clear mind when discussing your investment. One really good place to start every quarter is with Tim's (TMFMILEHIGH) quarterly review. He has been with us almost every step of the way and been in touch with the company numerous times. His assessments are fair and I'm sure he will be one of the first ones to find a chink in the armor when it appears. The only other advice I would give for someone is to hedge their bets a little when you have big gains. Maybe sell some calls against your investment or buy some puts. If you're worried about missing the boat but are afraid to pull the trigger because of valuation concerns, especially short term, look into long term leaps. A great way to invest and not worry about the day to day minutia that goes along with investments.

Again, these are not recommendations just suggestions.

Good luck with your investments.


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