Akamai Regains Its Footing

After two consecutive quarterly revenue declines, it is nice to see Akamai (NASDAQ:AKAM, news, filings) regain its growth bias in its third quarter earnings report.  Since the company dominates the CDN landscape by most measures, we can probably now say that the negative effect of the recession on the sector has eased somewhat.  Earnings per share still declined slightly, but came in ahead of expectations anyway both for Q3 and for Q4 guidance of $0.39-0.41 as well.  Here is a quick summary of the Akamai’s metrics in the context of the past 4 quarters

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	Q4/08	Q1/09	Q2/09	Q3/09
Revenue	212.6	210.4	204.6	206.5
COS	60.7	60.4	60.0	62.0
Gross Margin %	71.4	71.3	70.7	70.0
Normalized EPS	0.44	0.43	0.40	0.38

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For so long Akamai seemed to grow at huge rates almost at will, but this past year has clearly been the toughest they have had in a long time if not ever on the growth front.  You can also see the effect of the more competitive marketplace in the steady pressure on gross margins over the past few quarters.

Of course, it’s not really that tough.  They’re still very profitable and generating piles of cash, which they used to more than doubled the pace of its stock buyback program, repurchasing 2M shares for some $36M during the quarter.  We should all be so lucky to have such hard times.  So is it time to return to the heady days of 30-40% revenue growth?  Probably not just yet, one step at a time.

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