Akamai knocked it out of the ball park today. They exceeded expectations and their stock price jumped 20% . For a company the size of Akamai, especially a CDN, this is a rarity. In one day they surpassed the valuation of Splunk and Fireye; my hats off to Akamai. If IBM has any plans on buying Akamai, the acquisition price just rose by $2B. Since Akamai is the benchmark of the CDN industry, their stock price impacts the entire CDN ecosystem and it’s players.
Next at bat is Limelight Networks. They report earnings on Thursday February 13. My guess is Limelight barely exceeds expectations, pushing its stock price up by 20%, only to go back to the $2 mark, a week afterwards. For anyone that’s been following Limelight’s stock, we know how the story goes. If Limelight fails to deliver on earnings, its stock price is going to take a major hit, and take along with it, all the valuations of the startup CDNs. That’s an interesting dilemma, competitors of Akamai and Limelight, need to wish them the best, because their stock price is a reflection of the health of the CDN industry. At least in theory.
Regardless of what happens next Thursday, Limelight has a big challenge ahead of them. I personally would like to see Limelight’s market cap in the range of $3B, right next to Palo Alto Networks. If Limelight reaches a few billion dollars in valuation, all CDNs in the ecosystem may start commanding higher valuations when raising money, or getting acquired. That’s not too much to ask, the CDN ecosystem just wants to be at the same level as the pure-play security companies.
Sooner or later, Limelight needs to go onto the next phase of their life cycle, whether its offering a deep security portfolio, a SIEM CDN type feature, or whatever. Unfortunately, Limelight just missed one big opportunity by the name of Incapsula. Limelight should have acquired Incapsula, the most robust Security CDN in the ecosystem. It would have been a challenge, since both companies were started by the same founder, Shlomo Kramer, but he is a business man, like the rest of us; Limelight could have made him an offer he couldn’t refuse.