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Quick Hits: All About Akamai


Brief scrutiny of today's headlines.

Longtime favorite Akamai Technologies (AKAM) is set to report after the bell. Except for the variable of "bursting traffic," given the long-term and recurring revenues built into the firm's model, profits and earnings per share are usually predictable. ARPUs, new customer additions, churn, gross margins and competitive price pressures are usually far more interesting -- and stock-moving -- data points.

Given the extraordinary success of CBS' (CBS) NCAA March Madness On Demand (I was one of those who watched eight games online in the span of four days), I suspect that bursting revenues this quarter may make for a nice addition, but I can't imagine anyone hasn't already factored that into the stock price.

My guess is that, apart from any meaningful surprise on guidance, the biggest unknown is the resolution of Limelight Network's (LLNW) patent litigation. Akamai is seeking a permanent injunction against the company, which would effectively reduce it to an irrelevant competitor. Of course, this makes it the ideal time for Akamai to buy Limelight for a song (the second coming of Speedera) and effectively reestablish itself as the only game in town.

Other less reliable tells include the April 8th exercise of options by Akamai chief George Conrades to purchase more than 770,000 shares at prices between $1.26 and $14.46, which so far hasn't been followed by any sale of those shares, and active calls trading around the never ending rumors of someone making a run at Akamai.

Akami remains one of my longest longs with protection below $30.
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No positions in stocks mentioned.
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