{"id":24386,"date":"2011-10-10T09:00:04","date_gmt":"2011-10-10T13:00:04","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/10\/10\/akamai-takeover-verizon-or-ibm\/"},"modified":"2011-10-10T09:00:04","modified_gmt":"2011-10-10T13:00:04","slug":"akamai-takeover-verizon-or-ibm","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/10\/10\/akamai-takeover-verizon-or-ibm\/","title":{"rendered":"Akamai Takeover: Verizon or IBM?"},"content":{"rendered":"

Akamai Takeover: Verizon or IBM?<\/a><\/p>\n

by Justin Dove<\/a>, Investment U<\/em> Research
\nMonday, October 10, 2011<\/p>\n

According to Bloomberg<\/em> research, Akamai<\/strong> (Nasdaq: AKAM<\/a>) is the most talked-about takeover candidate<\/a> since 2005. That takeover chatter was rekindled this week as shares hit a new 52-week low at $18.25 per share.<\/p>\n

Shares are currently trading in the low $20s, following a slight pop based on the rumors. The stock has a 52-week high of $54.65, which was hit in late 2010. Since then, the stock is on a steady decline. Market value for Akamai plummeted to about $4 billion after reaching $9.9 billion last December.<\/p>\n

But Trefis.com claims the fair value of the stock<\/a> is almost $31 per share. And the low valuation could be enticing to potential suitors.<\/p>\n

What is Akamai?<\/strong><\/p>\n

Akamai is a company that speeds up internet content delivery. According to its website, “Akamai routinely delivers between 15 and 30 percent of all web traffic, reaching more than four terabits per second.”<\/p>\n

Its customers include Apple<\/strong> (Nasdaq: APPL<\/a>), Netflix<\/strong> (Nasdaq: NFLX<\/a>), NFL.com and MLB.com streaming videos and a who’s who list<\/a> of websites and internet-related companies.<\/p>\n

The stock has likely tanked over the last 12 months because of lowered expectation on company performance. After the second quarter, analysts predicted an EPS of $1.57 for this year and $1.79 in 2012. The expectations have now been lowered to $1.45 this year and $1.62 next year.<\/p>\n

Akamai has also faced increasing pressure from competitors, having renewed some of its content delivery contracts at lower prices. Late in 2010, the stock was trading with a P\/E ratio in the 60s, however currently the P\/E of roughly 23 is very reasonable for an internet technology company that should experience more growth.<\/p>\n

IBM and Verizon: Likely Takeover Candidates for Akamai
\n<\/strong><\/p>\n

Bloomberg<\/em> claims IBM<\/strong> (NYSE: IBM<\/a>) and Verizon<\/strong> (NYSE: VZ<\/a>) are the most likely takeover candidates. It also cites SunTrust Robinson analyst Rodney Ratliff, who thinks the company might not accept any offers under $40 per share.<\/p>\n

And although the stock suffered heavy losses, the company is still experiencing success. Akamai is projected to post an increase in net income for a fifth consecutive year at 13-percent growth over 2010.<\/p>\n

Even if Akamai isn’t taken over, its current price may represent a nice entry point for investors that aren’t totally spooked by the crisis in Europe.<\/p>\n

Good investing,<\/p>\n

Justin Dove<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n

Article by Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"

Akamai Takeover: Verizon or IBM? by Justin Dove, Investment U Research Monday, October 10, 2011 According to Bloomberg research, Akamai (Nasdaq: AKAM) is the most talked-about takeover candidate since 2005. That takeover chatter was rekindled this week as shares hit a new 52-week low at $18.25 per share. Shares are currently trading in the low … <\/p>\n

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