Limelight Networks Shines Bright

Limelight Networks (LLNW) has just reported second quarter earnings of $41.3M, exceeding analyst expectations of $39.6M. Surprisingly, they have raised their annual revenue outlook from $152M-$158M to $155M-$159M. This adds only a couple of million dollars to the prior estimates, but considering that Netflix is gone, this is actually good, in that it demonstrates that LLNW has stopped the bleeding. The unaudited current assets are $139M, and current liabilities are $25M, leaving LLNW with over $100M in short term liquidity, that it can use as play money to acquire a company or two. LLNW has been in clean-up mode for the last year, improving internal business processes, billing processes, employee churn rate, and customer churn rate, now it’s time to take a calculated risk and acquire someone.

Since there is no evidence that LLNW is planning on expanding its security portfolio, but instead focus on video, they should acquire Signiant. Signiant is probably the best pure-play, independent, high performance, large file sharing platform amongst large media companies, in the world. An acquisition would open new doors, and create new revenue streams that are currently closed to all CDNs, because they lack bolt-on capabilities to media workflows. LLNW would bypass Akamai and Level 3 in their Content Exchange services, by becoming a step in the production process during the making of feature films and episodes. Just about all large media companies use Signiant, including broadcasters, post-production houses, studios, distributors, and professional filmmakers. In the world of post production, once a product becomes an integral part of the internal workflow, its extremely difficult to change it.