What happened

Shares of Limelight Networks (EGIO -0.47%) rose as much as 10.9% on Friday, backing down to a 9% gain as of 1:40 p.m., EDT. The content-delivery network operator missed Wall Street's second-quarter estimates across the board, but investors saw encouraging signs that the worst of this downturn may be behind Limelight.

So what

In Q2, Limelight's revenue fell 17% year over year to $48.3 million. The adjusted bottom line swung from a $0.03 profit per share to a $0.06 net loss per share. Management left their full-year guidance targets steady, aiming for an adjusted net loss of $0.10 per share and top-line sales in the neighborhood of $225 million.

Operating under new management, Limelight focused on improved service quality in Q2. Media buffering rates were lowered, and global network throughput rose by 20%. This was done while the company lowered network operation costs by $8 million. On the earnings call, CFO Dan Boncel said that Limelight's network traffic has been ramping up in recent weeks, and the cost savings from actions taken in March are starting to pay dividends.

A green charting arrow bounces skyward from a trampoline.

Image source: Getty Images.

Now what

"I believe that our improved performance, our cost management and the launch of our new application acceleration and deployment solution positions Limelight to capture more market share," new CEO Bob Lyons said.

Investors accept Lyons' status report, pushing stock prices higher even though the reported numbers left a lot to be desired. The investment thesis for Limelight revolves around a turnaround theme today. The stock is still down 58% in 52 weeks despite Friday's strong recovery. I'm holding on to my own Limelight shares at these modest prices, and the stock looks cheap at 1.5 times trailing sales if you agree with Lyons' rosy forecast.