Akamai results beat as internet traffic surges

Wed Apr 24, 2013 7:52pm EDT

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(Reuters) - Akamai Technologies Inc (AKAM.O) forecast second-quarter results above analysts' expectations as its media customers turned to the internet content delivery company to help them manage surging traffic, sending its shares up 17 percent.

Akamai's clients include Facebook Inc (FB.O), Apple Inc (AAPL.O), Netflix Inc (NFLX.O), Sony BMG, News Corp (NWSA.O), Nintendo Co 7974.OS and NBC.

"Traffic levels in our media division were higher than expected towards the end of the quarter, primarily in large social media accounts and electronic gaming and software download accounts," Chief Executive Tom Leighton told Reuters.

The traffic levels in social media accounts were driven by Facebook, while software downloads were led mostly by Apple devices, D. A. Davidson & Co analyst Donna Jaegers told Reuters.

Akamai, whose 132,442 servers across the world carry content for clients, said it expects a second-quarter adjusted profit of 44 cents to 46 cents per share on revenue of $368 million to $378 million.

Analysts were looking for adjusted earnings of 44 cents per share, on revenue of $363 million, according to Thomson Reuters I/B/E/S.

The company said in February it would wind down some media contracts because they were not of long-term economic value.

The strong traffic increase in the first quarter more than offset the impact of the winding down of some media accounts, Chief Financial Officer Jim Benson said on a call with analysts.

"We still have one large video customer that we are in the process of winding down, and now it looks like it will wind down at the end of Q2, instead of the end of Q1," Leighton said.

Analyst Jaegers said Akamai took a $3 million revenue hit in the first quarter as it wound down a large media contract, and that the company would take another $1.5 million hit after the contract ends. The company has not identified the client.

"People suspect it's Netflix," Jaegers said.

Akamai's net income rose to $71.5 million, or 39 cents per share, in the first quarter, from $43.2 million, or 24 cents per share, a year earlier.

Excluding one-time items, the company earned 51 cents per share.

Revenue rose 15 percent to $368 million.

Analysts had expected adjusted earnings of 46 cents per share on revenue of $357.7 million, according to Thomson Reuters I/B/E/S.

Akamai counts Autodesk Inc (ADSK.O), EMC Corp (EMC.N) and SAP AG (SAPG.DE) as customers for its cloud infrastructure services.

Akamai shares, which closed at $36.09 on the Nasdaq, were trading at $42.25 after the bell.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Maju Samuel)

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