We’ve reached a boiling point, and things are about to blow over for Akamai, Limelight Networks (LLNW) and the entire CDN industry. If you’ve been living in the bat cave for the last couple of days, there was some major news that is likely to alter the makeup of the CDN landscape. First, the Court of Appeals denied Limelight Network’s request of appeal, in its fight against Akamai. Next, Pete Perrone, the super cool CFO from Limelight Networks is resigning on December 4. Pete has been with Limelight Networks for about a decade, and he is the definition of Perseverance. Very few people could endure what he did and still be sane.
If these were normal times, Akamai could gloat over the win against Limelight Networks, but Akamai has much bigger things to worry about. First of all, Akamai cannot, repeat cannot shock and awe The Street like it did during the last earnings call. If they disappoint investors again, its game over, whatever that means. Also, Akamai has Apple, Facebook and Microsoft to worry about. Although we are not aware of how much these three companies spend with Akamai annually, it is likely to be a hundred plus million, and then some. Each one could give Akamai an ulcer if they wanted to.
Disclaimer: We are not qualified to give investment advice, and don’t have a desire to do so, so please don’t consider this rant as such. Akamai and Limelight Networks must put all attitudes and egos aside, make up, and join operations. The funny thing is that even though Limelight Networks lost the appeals case against Akamai, Akamai needs Limelight more than Limelight needs Akamai.
Why Akamai Needs Limelight Networks
- Facebook and Microsoft can give Akamai an ulcer by shifting some of their traffic in-house. Apple can give Akamai a heart attack. Akamai needs LLNW media business to lessen the impact
- LLNW gives Akamai the upper hand in negotiations with Apple, especially after LLNW and Apple signed a deal recently
- Limelight’s $170M+ in annual revenue would be a much needed injection into Akamai’s Media Delivery business
- With LLNW, Akamai would increase its global market share among large enterprises by a few percentage points
- Akamai + Limelight would only leave Level 3 as a major CDN provider to the media niche that pushes large amounts of Live/VOD traffic volume. VDMS (Verizon) is not in the same club as Akamai, Limelight and Level 3 for the time being
- Limelight needs this to happen because $45M is a big chunk of change to fork over if this legal blog is right on the money