Akamai profits fall to $67.2M over increased infrastructure spending in anticipation of OTT traffic

Content delivery network provider Akamai Technologies saw revenues increase in the second quarter to $541 million, a 14 percent year-over-year increase. However, net income decreased 8 percent to $67.2 million, or 37 cents per diluted share, due to increased spending meant to bolster its infrastructure ahead of an expected wave of new over-the-top video entrants.

"We are continuing to make major investments in innovation and the expansion of our platform to develop new products and to accommodate the potential for substantially increased OTT traffic in 2016," CEO Tom Leighton said in an earnings release Tuesday.

The executive told investors and analysts on an earnings call that the company wants to be ready as over-the-top video "takes off" as predicted, The Wall Street Journal reported.

Besides the much-publicized launches of services like HBO Now, CBS All Access and Sling TV, as well as Sony Playstation Vue and the upcoming launch of Verizon's mobile OTT video service, at least one research firm is predicting that 15 to 20 "premium" online video providers -- offering subscription-only service mainly within specific content niches -- will enter the market by 2018.

As one of the world's largest content delivery networks (CDNs), Akamai remains a top resource for many online providers, despite the growth of competing CDNs in recent years and a trend among large services like Google to bring their content delivery efforts into an owned-and-operated network.

Akamai's profits may not enter a growth curve until next year, WSJ noted.

Shares of Akamai were down 5.69 percent to $69.46 in midday trading on the Nasdaq.

For more:
- see the earnings release
- WSJ has this story (sub. req.)

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