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Why Akamai Technologies, Inc. Jumped 16% Today

By Anders Bylund – Oct 26, 2016 at 1:12PM

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Tuesday's third-quarter report showed the former network performance expert taking on a lucrative role in network security.

Image source: Getty Images.

What happened

Shares of Akamai Technologies (AKAM -0.23%) jumped as much as 15.7% higher on Wednesday morning, boosted by a strong third-quarter earnings report (downloads PDF).

So what

Analysts had expected the content delivery network operator to report earnings of $0.61 per share on sales of almost $572 million. Instead, revenue rose 6% to $584 million. On the bottom line, earnings increased by 10% and landed at $0.68 per share.

The gains were driven by 19% year-over-year sales growth in the performance and security segment, including 46% higher revenue in the cloud security part of that division.

Now what

Akamai's business model is not the performance-focused service it used to be, as the security aspects of distributed content delivery networks have started taking the upper hand.

"As the cyber-attacks from last week demonstrate, enterprises need solutions capable of defending against massive botnets that are exploiting millions of online devices," said CEO Tom Leighton in a prepared statement. "This is an area where Akamai's unique architecture and ongoing investments in global scale and security innovation continue to make a critical difference."

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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