Ouch: LLNW shares down 80% from 52-week high
Anonymous commenter (in 2006):
The reason Akamai stock has done so well is that they have taken out their competitors. As soon as a new one emerges they either 1) sue them to try to stop their growth (Speedera, Limelight, Digital Island) or 2) buy them to constrain the market [Speedera, Netli, Nine Systems, Red Swoosh].
CAMBRIDGE, Mass. (AP) — Akamai Technologies Inc., which provides technology for the distribution of digital media, said Friday a jury ruled in its favor in a patent suit against Limelight Networks Inc., sending its stock higher in afternoon trading.
Like with Speedera, Akamai may come in now and acquire Limelight at a depressed price (assuming its can get approval). I own shares in both as I’m bullish on the cdn market (see my earlier post–I guess I was right that Limelight’s a buyout candidate, although this isn’t exactly what I had in mind). I guess the best I can hope for is a [now generous] $7/share offer (50% premium over current price) which would still net me a 20% return on LLNW and let Akamai take out its main competitor at a very cheap price (about 4x 2008 revenue, while Akamai is currently trading at 7x). From there I ride Akamai’s dominance for a few more years.
Anyway, this provides a great opportunity for other cdn start-ups, specifically low cost providers such as Panther (which just raised a big $15.75mm round from Index Ventures and Greylock Partners).
