- After Shedding 17% Last Month, Akamai Stock Looks Set To Turn Things Around
- Up More Than 10% In A Month, Akamai Stock Looks Unlikely To Continue Its Rally
- Down Almost 15% This Year, Is Akamai Stock Set To Bounce On The Back Of Strong Earnings?
- Forecast Of The Day: Akamai’s Media Net Revenues
- After A Strong Rally Last Month, Akamai Stock Rally To Fizzle Out?
- Down 3% Last Week, Is Akamai Stock A Buying Opportunity?
Apple (NASDAQ:AAPL) recently launched its iCloud service that allows users to store their music, photos and other documents on the cloud. This content is thus accessible from Apple’s mobile devices and any PC. While this is certainly a shiny introduction from Apple to fuel the growth in sales of its iPhone and iPad devices, it also holds promise for Akamai (NASDAQ:AKAM). As a content delivery vendor for Apple, Akamai has an advantage over its competitors like Limelight Networks (NASDAQ:LLNW), InterNAP Network Services (NASDAQ:INAP) and Level 3 (NASDAQ:LVLT) in delivering these services. 
It ultimately boils down to the question whether Apple’s introduction of the iCloud will have any material impact on its revenue per media customer? If we are to look at recent stock trends and Dan Rayburn’s report on Akamai’s revenue prospects for iCloud, it doesn’t seem to be the case for now. 
However, we feel that investors may be underestimating the potential impact here for a couple of reasons.
One, general weakness in the stock market recently due to macro issues has some concerned on overall consumer spending, including media and so discount the impact of iCloud spending. Secondly, the absence of video currently from the service ignores one of the largest catalysts for Akamai, which is driving demand for content delivery vendors like Akamai. While we agree that the audio opportunity is not too exciting, the popularity of Apple’s mobile devices like iPhone and iPad continues to grow and these customers are likely to use iCloud. Also we feel that video will be added to iCloud sometime in the near future, and as the customer base grows and video capability is added, the business opportunity for Akamai become more apparent
Our price estimate for Akamai stands at $35 implying a premium to the market price.Notes:
- What Could Apple’s iCloud Service Be Worth to Akamai? Here Are Some Numbers, blog.streamingmedia.com, Jun 6 2011 [↩] [↩]