Tag Archives: amzn

Akamai Revenue Guidance Light Amid Concern Over Apple, Facebook

Akamai Technologies ( AKAM ) late Tuesday reported Q1 earnings and revenue that topped expectations, though its current-quarter revenue guidance slightly missed Wall Street expectations. Still, Akamai stock was up 7.5% in early trading in the stock market today , touching a four-month high of 57.50. Cambridge, Mass.-based Akamai is the biggest provider of content delivery network (CDN) services. Worries that customers such as Apple ( AAPL ) and Facebook ( FB ) are shifting some of their data traffic to their own CDNs has pressured Akamai stock, and analysts have lowered Q1 estimates. Akamai said Q1 EPS ex items rose 8% to 66 cents per share, with revenue also rising 8% to $567.7 million. Analysts polled by Thomson Reuters had modeled 63 cents and $564 million. For Q2, Akamai forecasts revenue of $574 million at its midpoint of guidance and adjusted profit of 62 cents to 65 cents per share vs. consensus estimates of $578.4 million and 65 cents. “Revenue guidance is slightly under consensus, due to year-over-year decline in revenue from two major media delivery customers (Apple and Facebook) that are taking more of their volume in-house,” Michael Olson, a Piper Jaffray analyst, said in a research report. “Importantly, the impact from these customers is becoming less material as they go from 11% of revenue in 2015 to around 6% in 2016.” Colby Synesael, an analyst at Cowen & Co., says Akamai’s guidance might be too conservative. “While we appreciate management’s decision to err on the side of being overly cautious after its surprising revelation regarding these two customers on its Q3 (2015) call, it highlights management’s lack of visibility with its own top customers,” he said in a report. Akamai competes with  Level 3 Communications ( LVLT ) and  Limelight Networks ( LLNW ), as well as startups Fastly and CloudFlare.  Verizon Communications ( VZ ),  Amazon.com ‘s ( AMZN ) Amazon Web Services,   IBM ( IBM ) and  Comcast ( CMCSA )  are also emerging as new rivals in some parts of the CDN market. “Akamai has been very clear that the first half of 2016 would be marked by slower growth in the media segment, but then it expects (Internet TV) video to begin to accelerate growth. Similar to other large, secular growth opportunities, it is often difficult to project the exact timing of the opportunity, but we believe growth from (Internet TV) will begin to manifest in second half 2016,” said Michael Bowen, an analyst at Pacific Crest Securities, in a report.

EBay Q1 Beats On Earnings And Sales, But Growth Still Lags

EBay ( EBAY ) beat Wall Street’s first-quarter earnings and revenue estimates, the company said Tuesday, and investors rewarded the online merchant with a mild share boost after the close. The San Jose-based online merchant reported adjusted earnings per share of 47 cents, two cents ahead of estimates from analysts polled by Thomson Reuters. EBay said revenue was $2.1 billion for the quarter, slightly ahead of the $2 billion view. In after-hours trading, eBay shares climbed more than 4% at one point to 25.49. But shares settled back to a 1.3% gain later in the afternoon as enthusiasm was tempered by the company’s earnings projection for the second quarter that was short of estimates. In the regular session eBay ended trading up 1.11% to 24.49. “It’s good that they had a beat on top and bottom,” Scot Wingo, chairman of e-commerce consultants ChannelAdvisor, told Investor’s Business Daily. “But what’s driving a lot of their growth, is not the traditional marketplace.” Of the total growth, Wingo said that the core marketplace accounted for only 3% — StubHub, the company’s event-ticketing platform, and its classified business made up the rest of the growth. EBay, once a major e-commerce force, has a ways to go to rival the likes of e-comm powerhouse Amazon.com ( AMZN ). “E-commerce is growing at 15%,” he said. “To really get the turnaround — we’re about halfway through an 18-month turnaround — it would be nice to see some data to see that it is taking hold.” For the second quarter of 2016, eBay said it’s expecting growth of 4% to 6%, or between $2.14 billion and $2.19 billion in sales. The company expects adjusted earnings per share of between 40 cents and 42 cents. Analysts see earnings of 44 cents a share on sales of $2.14 billion. As for eBay’s future prospects, Wingo said, “Historically they’ve gone through slow periods and then accelerated.”

Cloud Computing Not Seen Cannibalizing Server Market, As Assumed

Dell owner Michael Dell as well as investors in Hewlett Packard Enterprise ( HPE ) and IBM ( IBM ) — the big 3 computer server companies — ought to appreciate Bernstein’s latest take on how much the cloud is cannibalizing the server market. It’s not, says the investment bank. “Isn’t it unbelievable?” chided Bernstein analyst Pierre Ferragu in a Friday research note re-issued Tuesday. “The cannibalization theory most investors and industry observers take for granted and as an axiom to any proper thinking about the future of this industry is just plain wrong: The cloud grew from zero to approximately 20% of total enterprise compute while shipments into traditional data centers kept stable” from 2005 through 2015, he said, using Gartner and Bernstein estimates that showed server shipments near 8 million units annually during those 11 years. “Want a last nail in the coffin of this silly cannibalization theory?” Ferragu wrote. “Over the same 2005-2105 period, virtualization went from zero to about 70% penetration, increasing on average the utilization rate of servers by a factor of approximately seven times. This didn’t trigger any cannibalization either (although countless sell-side analysts and investors take it for granted that virtualization killed the server market).” What happened was “very simple,” Ferragu explained. From 2005 through 2015, thanks to virtualization and the cloud, the cost of computing fell sharply. That sharp fall “never meant money spent on compute capacity decreased,” he said. “It meant the amount of compute consumed by enterprises went through the roof. Nothing was ‘moved to the cloud.’ The cloud brought exceptionally cheap compute and enterprise used it to grow their consumption of compute.” In December, Gartner said Q3 server shipments rose 9.2% from the year-earlier quarter, and server revenue rose 7.5%.  By company, what became Hewlett Packard Enterprise on Nov. 1 led the world in Q3, with server revenue up 9.1% to $3.7 billion for the quarter, followed by Dell up 9% to $2.4 billion, then IBM up 5.1% to $1.3 billion, after it sold its lower-end x86 server business to Lenovo. “Dear reader, you probably consume 1,000 times more mobile data than in 2005, about 100 times more Internet traffic in general and you use on average about 1,000 times more transistors in your life,” said the analyst. Total cloud revenue will grow about 50% annually over the next five years, and assuming cloud revenue per server will grow at 10% annually, largely due to Amazon ( AMZN ) Web Services, “this still leaves us with about 40% per annum growth in server count,” Ferragu said. “As we saw absolutely no sign of slowdown while the cloud went from zero to 20% of compute, our intellectual honesty forces us to consider traditional enterprise data center will remain broadly stable. … “The cloud will grow easily to well over 50% — actually 60% in our forecast — of the total of compute volumes in five years.” In the stock market today , shares of HPE rose nearly 1% and IBM rose a fraction. Privately held Dell is in the process of acquiring storage systems leader EMC ( EMC ), which was flat Tuesday.