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Akamai Q1 earnings beats Street estimates but sees weak Q2

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Internet content delivery company Akamai Technologies (NASDAQ:AKAM) late Wednesday posted first-quarter earnings that beat estimates but issued an outlook that fell short of what analysts were expecting.

Akamai's technology is vital for delivering high-definition video as online services like Netflix (NASDAQ:NFLX) and Hulu explode in popularity, but competition in its market is growing.

For the first quarter, Akamai earned $43 million, or 24 cents per share compared with $51 million, or 26 cents per share, a year ago. Excluding items, it earned 41 cents per share. Revenue rose 16 percent to $319 million.

Analysts had expected adjusted earnings of 38 cents per share on revenue of $310.7 million.

"We are very pleased with our first quarter results, which were driven by continued adoption of our cloud infrastructure solutions and an acceleration of traffic growth in our content delivery solutions," Akamai's president and CEO Paul Sagan said.

"Customers have responded positively to the product investments we have made to support mobile and cloud computing, Web security, and the shift of video and other rich media to the Internet."

Akamai also said Sagan plans to leave by the end of next year and will help with the transition to a new chief executive.

The Internet data delivery company said it expects second-quarter adjusted earnings of 36 cents to 38 cents per share on revenue of $322 million to $330 million.

Analysts were expecting adjusted earnings of 39 cents per share on revenue of $314.8 million, according to Thomson Reuters.

In December, the company acquired rival Cotendo, which makes software to speed up web and mobile sites, for $268 million to strengthen its web acceleration business. The acquisition added clients such as Facebook, Zynga (NASDAQ:ZNGA), Google (NASDAQ:GOOG) and AT&T (NYSE:T).

The company also expects to spend around $65 million to $70 million in the quarter for capital expenditure.

Quick facts: Akamai Technologies, Inc.

Price: 99 USD

NASDAQ:AKAM
Market: NASDAQ
Market Cap: $16.07 billion
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