Akamai's 3Q profit jumps, but warns on 4Q revenue

Akamai's 3Q net income jumps 65 percent, but shares fall on warning of contract renegotiation

Associated Press

NEWS: Akamai Technologies Inc. posted a 65 percent jump in third-quarter net income as revenue rose 15 percent. It also authorized a new $750 million stock buyback plan. But the company warned that it is renegotiating a deal with its largest media customer, which may result in fourth-quarter revenue missing Wall Street expectations.

WHAT THEY DO: Akamai, based in Cambridge, Mass., helps websites deliver video and other content such as software downloads to users.

WARNING: Akamai said its customer, who it didn't name, is up for renewal and hasn't had its price reset for a few years. The company said on a conference call that it expects "the step down in revenue will have a notable impact in the quarter that the renegotiation takes place, and will impact overall company growth rates over the next few quarters." The deal is likely to take effect in the first quarter, but Akamai is factoring it into fourth-quarter guidance just in case.

NUMBERS: Net income rose to $79.8 million, or 44 cents per share, in the three months that ended on Sept. 30. That's up from $48.2 million, or 27 cents per share, in the same quarter a year ago. Adjusted to exclude one-time items, the company said it earned 50 cents per share in the latest period.

Revenue climbed to $395.8 million from $345.3 million. Analysts expected earnings of 47 cents per share on revenue of $388.2 million.

FUTURE: Akamai is forecasting fourth-quarter earnings between 49 cents per share to 53 cents per share for the quarter. Analysts expect earnings of 52 cents per share, on average. Revenue is expected between $412 million and $430 million, compared with the $424.1 million analysts predict.

STOCK: Down $3.38, or 6.5 percent, to $48.49 in after-hours trading Wednesday. Shares fell $1.52, or 2.9 percent, to close regular trading at $51.87.

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