The Hollywood writer’s strike hasn’t pinched Akamai Technologies, finance chief J.D. Sherman said today at Goldman’s annual tech conference.
During rival Limelight Networks’ (LLNW) Q4 earnings call earlier this month, CEO Jeff Lunsford said the writers strike will cost the company more than $1 million in lost revenue this quarter, and could possibly cost a few million dollars per quarter for the rest of the year.
Not so for Akamai (AKAM), Sherman said: “The writers strike — I don’t really see a huge impact with that.”
Live notes from the rest of the Q&A:
2:40 p.m. ET Macroeconomy? Because we’re focused on the Web and business is moving online to the Web, I wouldn’t say we’re seeing any direct impact from macro uncertainty that maybe some of the more traditional sectors are seeing, but I don’t think it means we’re completely immune.
2:41 Shift of commerce online continues, which we support. To date, I don’t think we’ve seen much direct impact.
2:42 First rush to Web was to sell online, at any cost. Then business model shakeout. Real push now for media companies to start monetizing their content. In 2006 saw wave of rich media moving online, almost a rush to the Web like we saw from e-commerce. Last year, customers starting to rationalize business models, figure out how to monetise. That’s great for us. As business models mature, AKAM performance is more important.
2:44 Second part: Our investment in solutions/performance we can drive based on our network. “Sticky” to customers. Starting to see move.
2:46 Media becoming more dynamic across the Web. Shopping cart, UGC: So we rolled out dynamic site acceleration. Acquired Netli.
2:48 Driving engagement with enterprise customers via professional services. “Solution” contract including professional services, CDN, etc.
2:49 Different customers pick different packages. We look at entire value chain about selling online, etc. Where can we fit with scalable solution that applies to broad set of customers? StreamOS is an example. See a lot of customers struggling with that problem. Their expertise is in the content. Struggling to find custom shop. They want “scalable building blocks.”
2:51 Saw low new customer adds last quarter. Is that the kind of pace going forward? We don’t guide (or focus) on customer growth number. Doesn’t really drive a significant portion of our growth. Should have talked about on the call: In Q4 we added on a gross basis the same amount we’ve added for several quarters, 145-150. Churn picked up, some from natural churn from acquisitions. Thing we look at is quality of customers that we’re adding. Great metric: Of customers we added, average size/revenue is 30% higher than it is before. Not trying to sign up as many customers as we can: Sign then up then upsell them.
2:55 Talking about various upselling options. 30% of revenue coming from customers using Akamai’s dynamic services.
2:57 How much willing to take a hit by commoditizing core CDN and upsell? That was part of transitions through 2007. Built all of our offerings around a set of solutions. Digital media, dynamic site, application acceleration.
2:58 Very happy to get aggressive on pricing when we can upsell “solution.” Lowest cost in industry, so we can do that.
2:59 Gross margin drag continue? This year expect decline to continue at a slower pace. Why does it slow? Traction around software aspect of solutions. Not as much tremendous growth around digital media.
3:02 Writers strike aside or macro environment, growth still going on. People still watching more video oneline. “The writers strike — I don’t really see a huge impact with that.”
3:03 Gaming? Growth there? Exciting thing to watch there is number of new devices that are getting connectivity on the Web and capability of those devices to create ecosystem that demands new content. Excited to be working with Sony and Nintendo on their downloads as well as a lot of the gaming software guys.
3:08 Starting to make some headway on productivity. Bangalore ops we acquired with Speedera. 15% of our employees across the board. Lawsuit with Limelight? Akamai has traditionally been aggressive protecting its IP. So many folks getting into CDN industry. Will to continue to be as aggressive? We value our IP very highly. Never like to invent something and have someone else use it. Relationships we’ve established to manage that type of relationship and build it — been at it for 10 years. Will continue to defend our IP, but that’s not the sole source of what drives our business.
3:10 Will you make more acquisitions? Look at last 3-4 — that’s the type we’d like to do. If we can accelerate our entry into market from a new area, we’ll add on to our technology. Active looker but discerning buyer.
3:11 Q&A over.
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