Akamai continues to shift focus from media-based CDN to infrastructure, security

Content delivery network provider Akamai is putting slightly less emphasis on its delivery services for media and entertainment companies and content providers, and is putting more emphasis on performance and security businesses -- a move that appears to be keeping its investors satisfied.

The company maintained its guidance for the first quarter of 2016 of $562 million in revenue and a profit between 61 and 64 cents per share, soothing attendees of its annual investor day in Boston and leading at least one analyst firm to maintain a "Buy" rating on the company's stock, according to an Investor's Business Daily article.

Akamai's shift toward infrastructure and security services isn't surprising, as the CDN business segment continues to see price cuts on delivery services that average 15 to 20 percent a year.

"Performance and security were at the top of Akamai's long-term growth forecast. It is going to be increasing its Web performance and security capex into the middle teens as a percentage of revenue from the low teens, and maintained the rest of the target model," wrote Pacific Crest Securities analysts Michael Bowen and Brandon Nispel following the investor event. The analysts reiterated an "Overweight" rating for Akamai with a price target of $71.

Meantime, Evercore analysts Jonathan Schildkraut and Michael Hart speculated that Akamai had entered into some sort of partnership with Google and Microsoft to expand and improve apps. "Based on management comments, we believe Akamai has partnered with Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG) to accelerate and secure apps on Azure and Google Cloud," the analysts said in an email brief as well as a post on Barrons.com.

An Akamai spokesperson told FierceOnlineVideo that its relationship with both companies hasn't changed. Akamai announced a partnership with Microsoft in late 2015 to integrate into the Azure cloud platform, and in November announced it would establish direct interconnects between Google's Cloud Platform and the Akamai Intelligent Platform.

Evercore's analysts maintained their "Buy" rating for Akamai with a price target of $68.

For more:
- see this Investor's Business Daily article
- see this Barron's post

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