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Akamai Technologies (AKAM) Drops Amid Better-Than-Expected Q1, Buyback Extension

 April 25, 2012 06:45 PM

Akamai Technologies Inc. (NASDAQ:AKAM), which provides content delivery and cloud infrastructure services, reported a 15% decrease in first quarter earnings due to higher costs and expenses, as well as an increase in provision for taxes. Despite earnings and revenue exceeding Street's expectations, its shares fell 6.09% in aftermarket.

Earnings for the first quarter were $43.23 million or $0.24 per share, down from $50.62 million or $0.26 per share last year. Normalized earnings rose to $75.19 million or $0.41 per share from $72.23 million or $0.38 per share.

Revenue increased to $319.45 million from $275.95 million. Analysts had expected a profit of $0.38 per share on revenue of $310.70 million.

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Sales through resellers and sales outside the United States accounted for 21% and 28%, respectively, of revenue for the first quarter of 2012.

Total costs and operating expenses for the quarter were $247.87 million, up from $203.21 million last year. Operating income declined to $71.58 million from $72.75 million.

Provision for income taxes for the quarter rose to $29.56 million from $24.06 million last year.

Additionally, Akamai said its board of directors has authorized a $150 million extension of its share repurchase program, effective for a 12-month period beginning on May 1, 2012. The company's goal for this program, which is expected to be funded by cash from operations, is primarily to offset dilution created by its equity compensation programs.

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During the first quarter of 2012, under its current share repurchase program, the company repurchased about 223,000 shares of its common stock for $8 million, an average price of $35.45 per share.

As of March 31, 2012, the company had repurchased 18 million shares of its common stock for $491 million, at an average price of $26.86 per share since April 2009. The company had about 179 million shares of common stock outstanding as of March 31, 2012.

AKAM closed Wednesday's regular session up 2.68% at $38.75. The stock has been trading between $18.25 and $41.25 for the past 52 weeks.

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