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Summary: Patent and price battles have seen content-delivery-network [CDN] giant Akamai (NasdaqGS: AKAM - News) and upstart competitor Limelight (NasdaqGM: LLNW - News) lose ground, while $667 million small-cap rival Internap (NasdaqGM: INAP - News) forecasts 30% earnings growth for 2007, 50% higher gross margins and company-wide higher profits. Internap only recently entered the CDN business with its VitalStream acquisition, and CDN accounts for just 10% of Internap's $192.3 million in revenues. But it foresees explosive CDN growth as net users increasingly seek smooth delivery of rich online content. Internap's edge is its proprietary software that has guaranteed 100% reliable internet-routing services and data center hosting (90% of Internap's business), and now guarantees 100% uninterrupted content delivery. The reliability guaranty premium keeps Internap out of CDN price wars while gaining it market share. Akamai shares fell about 25% last week over forecasts of market-share loss and shrinking orders; Limelight is down about the same this month. Barron's says Internap's Tuesday earnings report will forecast higher growth, lifting its $13.42 shares back towards January's $20 price.
Published by SeekingAlpha

Labels: AKAM, INAP, LLNW