Akamai Crushed; Is It A Buying Opportunity? (AKAM)

Akamai Technologies

released its Q4 earnings results after the closing bell on Wednesday after the closing bell. The company reported earnings per share of $0.40 versus $0.34 in the year ago quarter. This compared to analysts' consensus EPS estimates of $0.38. Revenue for the quarter was up 19% to $284.67 million compared to $238.31 million in the year ago period. This barely beat analysts' consensus of $283.08 million. Looking ahead, AKAM expects to report net income per share between $0.35 and $0.37, which is below Wall Street consensus of $0.38. The stock has been completely destroyed on the back of this earnings report, falling 16% to $40.33 in early trade. AKAM had been trading at a lofty valuation prior to this report, and it is clear that investors were looking for more upside in the company's earnings and guidance. A perusal of AKAM's valuation suggests that there could be more downside going forward. The stock still trades at a trailing P/E of 48, a forward P/E of 25, and a PEG ratio of 1.98. This is still an expensive stock. Analysts are projecting top line growth for AKAM of about 18% in 2011. Given these metrics, and the negative sentiment, the shares could easily trade down to a forward P/E of 20. One of the interesting things to consider with regards to AKAM, however, is that as the share price falls, the company becomes a more attractive takeover target. Akamai has long been viewed as a potential acquisition target, and this chatter could very well pick up as the share price and company's valuation come down to more reasonable levels. Akamai Technologies, Inc. (Akamai) provides services for accelerating and improving the delivery of content and applications over the Internet, ranging from live and on-demand streaming video capabilities to conventional content on Websites, to tools that help people transact business and reach out to new and existing customers.