Akamai Drops 10%: 2Q, Q3 View Miss; Bracing for OTT Surge

Shares of Internet bandwidth provider Akamai Technologies are down $7.65, or over 10%, at $66, in late trading, after the company delivered a weaker-than-expected Q2 earnings report, and forecast this quarter’s revenue and profit below consensus.

The content-delivery and Internet security firm posted adjusted earnings of 57 cents a share, a penny below Wall Street’s estimate, and down 2% from a year ago. (The company notes that EPS was up 3%, adjusted for foreign exchange.) Revenue, up 14% to $541 million, was in line with estimates, per FactSet.

The company called out its continuing investment and preparation for over-the-top television services, and it highlighted 2016 as a likely breakout year for so-called OTT video services, or “over-the-top” streaming of video.

Akamai’s servers touch a significant amount of the world’s Internet traffic, so it’s in a good position to see the transition to OTT. The company plans larger-than-usual CapEx outlays this year as it prepares for the surge in streaming traffic.

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