Akamai Facing New Challenges in Value-Added Services

by Trefis Team
+3.98%
Upside
54.20
Market
56.36
Trefis
AKAM
Akamai
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Over the recent past, aggressive pricing by companies like Limelight Networks (NASDAQ:LLNW), InterNAP Network Services (NASDAQ:INAP) and Level 3 (NASDAQ:LVLT) has pressured Akamai (NASDAQ:AKAM) to lower its own prices. As a result, Akamai’s stock price has taken a hit. Akamai has been able to withstand such pressure due to its strong position in value-added services, which account for more than 50% of its revenues. However, this business segment may now be under more competitive pressure.

Cotendo is reportedly raising additional capital with investors such as Juniper (NYSE:JNPR), [1] and is emphasizing value-added services that could challenge Akamai’s position in this market. [1] While the outcome of this heightened competition remains to be seen, growth in Akamai’s revenue per customer could take a serious hit if competition picks up like it has for content delivery prices.

Our price estimate for Akamai currently stands at $35.07, implying a premium to market price.

See our complete analysis for Akamai’s stock

Notes:
  1. CDN Cotendo Raises $17M, Adds Juniper and Citrix As Investors, Puts More Pressure On Akamai [] []
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