Tag Archives: lvlt

Akamai Says M&A, Stock Buyback Both Do-able

Akamai Technologies ( AKAM ) is sticking with its revenue target of $5 billion by 2020-21. At its investor day on Monday, the company said that it has enough cash to pursue stock repurchases as well as acquisitions. “We could do both — M&A or share buybacks,” said Akamai CFO Jim Benson. He said that Akamai has about $1.5 billion in cash. Akamai did not change Q1 guidance calling for profit in a range of 61 cents to 64 cents per share and revenue of $562 million at its midpoint, up 7% from $526.5 million a year earlier. Akamai’s 2015 revenue rose 12% to $2.2 billion. “Although Akamai expects a lower overall growth rate for 2016, management is maintaining its long-term revenue goal of $5 billion by 2020, which implies a CAGR (compound annual growth rate) of 18%,” said Jim Breen, a William Blair analyst, in a report. Cambridge, Mass.-based Akamai is the biggest provider of content delivery network services to media and entertainment companies. Akamai’s CDN technology speeds up e-commerce transactions, business software downloads and video streaming to mobile devices. Akamai has expanded into higher-margin cloud infrastructure services and security, aiming to offset price cuts in the CDN business that averages 15% to 20% a year. At the investor day in Boston, Akamai said that it expects to grow sales overseas as well as to corporate customers. “The media business was de-emphasized relative to last year and is beginning to be overshadowed by the performance and security businesses,” said Michael Bowen, an analyst at Pacific Crest Securities, in a report. Akamai’s stock is up about 4% in 2016. It has an IBD Composite Rating of 59 out of a possible 99. Akamai competes with Limelight Networks ( LLNW ) and Level 3 Communications ( LVLT ) as well as Verizon Communications ( VZ ). Verizon carries a high Composite Rating of 98 and makes  IBD’s Big Cap 20 weekly screen of large-cap growth stocks.

GTT Communications Gets Boost From Enterprise Shift To Cloud

GTT Communications ( GTT ) is getting a lift as large companies use its Internet and ethernet networking connections for cloud-based services, say analysts. GTT, which has made two acquisitions since September, on Thursday reported Q4 revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) that topped views. December-quarter revenue rose 83% to $114.8 million vs. analysts’ consensus estimate of $114.4 million. “We believe organic revenue growth could accelerate as cloud adoption, increasing bandwidth usage and salesforce hiring continues,” said Michael Bowen, a Pacific Crest Securities analyst in a report. In the U.S., McLean, Va.-based GTT competes with Level 3 Communications ( LVLT ), CenturyLink ( CTL ), and Verizon Communications ( VZ ). GTT garners nearly 40% of revenue overseas, where it competes with KPN, Colt Technology,  Deutsche Telekom ( DTEGY ) and Orange ( ORAN ) business services. “GTT’s goal is to provide connectivity for customers to any location in the world with any application in the cloud,” said Jonathan Charbonneau, a Cowen & Co. analyst, in a report. GTT’s stock was up 2% on the stock market today , after popping 12.5% on Thursday. Shares are about even in 2016, but they are down from a high of 25.7 in mid-September. GTT has an IBD Composite Rating of 60. It’s in IBD’s Internet Network-Solutions group, where Gigamon ( GIMO ) is tops with a CR of 93. IBD’s Internet Network-Solutions group is ranked No. 107 out of 197 industry groups. “GTT continues to be a beneficiary of the shift to cloud services, and the need for managed network services from multinational enterprises,” said Oppenheimer analyst Tim Horan in a report. GTT agreed to buy Telnes Broadband for $18 million in February. It purchased One Source Networks in September. Image provided by Shutterstock .

Verizon XO Purchase Could Boost 5G Wireless, ‘Small Cell’ Plans

Verizon Communications ( VZ ), in a move that could boost its plans to offer 5G wireless services, agreed to buy privately held XO Communications’ fiber-optic network for about $1.8 billion. Verizon said it expects the deal to close by June 30. Level 3 Communications ( LVLT ) has also been viewed as a potential buyer of XO Communications. Controlled by activist investor Carl Icahn, XO Communications provides services to large and midsize businesses. It also connects cellphone towers to mobile switching centers, where calls are routed to long-distance networks. In that market, XO competed with Zayo Group Holdings ( ZAYO ) and others. Verizon plans on improving its wireless network with “small cell” technology in urban areas, a process called densification. The low-power “base stations” are located in shopping malls and outdoor public spaces. “Verizon’s ownership of XO’s fiber-based IP and Ethernet networks will help better serve enterprise and wholesale customers. In addition, acquired fiber facilities will help Verizon continue to densify its cell network,” said Verizon in a statement. Verizon will also lease XO Communications’ high-frequency wireless spectrum, with an option to buy for $200 million, by year-end 2018, UBS said in a research report. “LMDS (local multipoint distribution service) is very high frequency spectrum in the 28-31 GHz bands, which Verizon believes will be well-suited for 5G,” UBS analyst John Hodulik said in the report. “XO’s LMDS spectrum covers some of the largest U.S. metros, including New York, Boston, Chicago, Minneapolis, Atlanta, Miami, Tampa, Dallas and Austin, Denver, Phoenix, San Francisco and Los Angeles.” XO has also competed in what’s called the “special access” market, along with Sprint ( S ) and Level 3, vs. Verizon and AT&T ( T ). The Federal Communications Commission has been probing how banks, schools, retail outlets and others buy high-speed data services from telecom companies. Verizon stock was up a fraction in early afternoon trading in the stock market today .