Akamai: Moving From Buyout Bait Back To Resurrection (AKAM, YHOO, GOOG)

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Akamai Technologies, Inc. (NASDAQ: AKAM) is flying high this morning.  The content acceleration company reported earnings last night that beat expectations and the company is taking a more focused look at management.  We cannot help but to think that the move here now may be a shift away from Akamai as buyout bait to Akamai as a turnaround.

The news is that net income rose to $42.3 million from $39.7 million and comparable earnings that analysts use came in at $0.34 EPS as revenue rose more than 10% to $281.9 million. Thomson Reuters had estimates of $0.33 EPS and $278.87 million in sales.

For the current quarter we are already in, Akamai said revenue should come in between $303 and $315 million versus the Thomson Reuters estimate of $310.53 million.  Sales in the Q4-2010 period were $$284.7 million.

Another bit of news is that David Kenny stepped down as President after only about a year and CEO Paul Sagan has been given the additional role of president (again).  The rumor is that David Kenny is a possible Yahoo! Inc. (NASDAQ: YHOO) CEO candidate.

The takeaway is simple.  Akamai is constantly thrown around as a takeover candidate and the rumor mill has always been active there.  The rumored acquirer most recently was Google Inc. (NASDAQ: GOOG) but that was effectively denied or rejected.  We always thought that getting a high-premium buyout takes away the value and there are still too many buried shareholders who remember much higher share prices that would vote against a low-premium merger.

Now is the time to consider whether or not Akamai is turning itself around.  Shares closed at $23.78 yesterday and the 52-week range is $18.25 to $54.65.  Yep, shares had been cut in half… and then some.

Akamai shares are flying higher with gains of over 14.5% at $27.25 this morning after about 75 minutes of trading.

JON C. OGG

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