U.S. Markets closed

Ahead of the Bell: Akamai surges on results

The Associated Press

Akamai Technologies jumped in premarket trading Thursday on a strong earnings report and after the content delivery company appeared to put to rest fears that it was losing its biggest client.

Shares were under pressure in recent days on rumors that Apple was building its own content distribution network.

During a conference call with investors Wednesday, the company's chief financial officer, James Benson, cited in the company's aggressive outlook the "the timing of the renegotiation with our largest media customer."

That customer was not named, but analysts who follow the company presumed it was Apple.

William Blair analyst Jim Breen noted that Akamai issued guidance for the first quarter that exceeds consensus estimates, even considering the impact of the renegotiated contract.

"The company continues to benefit from numerous positive trends in e-commerce, cyber-security, IT outsourcing, and content delivery, which continue to create demand for its network and Web performance solutions," wrote Breen, who rates the stock "Outperform."

Michael Turits of Raymond James said that the first-quarter revenue guidance of $426 million to $442 million — versus the average analyst estimate of $414.2 million — implies that even with the absence of Apple, the rest of Akamai's media delivery business is accelerating.

The Cambridge, Mass.-based company helps websites deliver video and other content, such as software downloads, to users. It said adjusted earnings for the quarter ended in December came to 55 cents per share, 3 cents better than estimates. Revenue jumped 15 percent and also beat estimates compiled by FactSet.

Shares of Akamai added 17 percent in premarket trading to $55.66.