Analyzing Blue Harbour's Increased Positions in 4Q14 (Part 3 of 6)
Blue Harbour and Akamai Technologies
Blue Harbour increased its position in Akamai Technologies (AKAM) in 4Q14. The company accounts for 10.31% of the fund’s portfolio in 4Q14.
Akamai posted strong 4Q and full-year 2014 results
Akamai reported 4Q14 revenue of $536 million—up 23% YoY (year-over-year). It reported net income of $97 million, or $0.54 per diluted share—up 21% YoY.
For full-year 2014, the total revenue was $1,964 million—a 24% increase over 2013. GAAP (generally accepted accounting principles) net income was $334 million in 2014, or $1.84 per diluted share—a 14% increase from 2013.
In the earnings release, Akamai’s CEO, Dr. Tom Leighton, said that “Our strong revenue results continued to be driven by solid performance across all our geographies and all of our major product lines, with very strong growth coming from our Security and Media products. As we look forward to 2015, we expect to continue investing in the business with the goals of building out our network, expanding sales capacity, deepening channel relationships and accelerating innovation to help our customers secure and grow their on-line businesses.”
Repurchased shares in 4Q and full-year 2014
Akamai’s share repurchase program was authorized in October 2013. It repurchased 0.7 million shares of its common stock in 4Q14 for an average price of $59.76 per share.
In full-year 2014, the company repurchased 4.6 million shares of its common stock at an average price of $58.02 per share.
As of December 31, 2014, Akamai had 178 million outstanding shares of common stock.
Largest content distribution network
On Akamai’s website, it stated that “As the creator of the world’s premier content distribution network, or CDN—which today delivers up to 30% of global internet traffic—Akamai has been the leader in bring CDN benefits to web property owners and web users. With Network Operator Solutions, we’re also enabling network service providers to benefit by deploying their own CDNs.”
Last year, Apple (AAPL) also announced its own CDN (content distribution network) with the rollout of iOS8. This has become a concern for Akamai’s growth. Level 3 Communications (LVLT) and Verizon (VZ) are also posing serious competition to Akamai with their entry into the CDN space.
Level 3 has 0.38% exposure to the Technology Select Sector SPDR Fund (XLK).
Overview of Akamai Technologies
Akamai is a provider of cloud services that deliver, optimize, and secure online content and business applications. The company offers Media Delivery Solutions, Performance and Security Solutions, and Service and Support Solutions.