By Cornelius Rahn - Jan 24, 2012 6:11 AM GMT+0700
Akamai Technologies Inc. (AKAM), operator of a server network that lets businesses such as Apple Inc. (APPL) speed up data delivery, targets purchases as the global economic woes will restrict the company’s growth this year.
The company, whose clients include airline Cathay Pacific Airways Ltd., video-streaming service Netflix Inc. and music channel MTV, will “opportunistically fill holes” in its portfolio, Chief Executive Officer Paul Sagan said yesterday in an interview in Munich. “I’m telling our people ‘here’s our product line-up, if you can fill these gaps better on a buy than on a build model, that’s what we should do.’”
Akamai, based in Cambridge, Massachusetts, is only “cautiously optimistic” for 2012 and the company should be able to “grow even through tough times,” Sagan said. Sales may climb 11 percent to $1.28 billion this year after increasing 12 percent in 2011, according to the average estimate in a Bloomberg survey among 22 analysts. The company plans to expand sales on average by 15 percent to 20 percent each year to reach $5 billion by the end of the decade, Sagan said.
Akamai’s technology is helping to speed up data traffic as more consumers and businesses surf the Web and download documents and music. Despite the global economic slowdown, Akamai will this year benefit from increased awareness of online security among customers, more mobile devices that can surf the Web, and demand for video content, Sagan said.
Economic Woes
The World Bank cut its global growth forecast last week by the most in three years, saying that a recession in the euro region threatens to exacerbate a slowdown in emerging markets such as India and Mexico. The world economy will grow 2.5 percent this year, down from a June estimate of 3.6 percent, the Washington-based institution said.
Akamai in December bought startup competitor Cotendo Inc. for about $268 million in cash, to boost its acceleration technologies for its Web-based cloud computing system. The purchase was Akamai’s second largest after the $2.19 billion acquisition of InterVU Inc. in 2000, according to Bloomberg data.
The stock declined 1 percent to $31.72 yesterday in Nasdaq trading in New York. Akamai has dropped 36 percent in the last 12 months, valuing the company at $5.7 billion.
Akamai itself was the target of speculation about a takeover by Google Inc. (GOOG) last year. Google said in October that it has no plans to acquire the company.
Ericsson Partnership
Akamai plans to make half of its revenue outside North America at some point, Sagan said, without providing a timeframe. In 2010, the company generated 72 percent of sales from the U.S., according to data compiled by Bloomberg.
“We have a very strong balance sheet, no debt, very strong cash flow and we could probably raise money if we found something,” Sagan said. The company won’t expand into certain markets such as consulting or Web hosting where it would compete with clients, he said.
Akamai, which last year entered a partnership with mobile- phone network maker Ericsson AB (ERICB) to develop technology that will let companies accelerate access to their online content, is on track to implement that project and will present results this year, Sagan said. Customers, especially in the financial sector, are willing to pay for a guaranteed performance boost, he said.
To contact the reporter on this story: Cornelius Rahn in Munich, Germany at crahn2@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
Posts
No comments:
Post a Comment