Akamai Technologies Inc.
reported on Wednesday a first quarter operating loss of US$2.2 billion — that’s right, billion. The stunningly large losses are largely the result of write-downs of Akamai’s acquisitions of Intervu Inc. and Network24 Communications Inc., along with some equity investments.
Akamai is the media delivery company that Apple and other companies use to speed delivery of content on their Web sites. The company maintains a global server network that keeps data closer to the users requesting it, resulting in less congestion and bottlenecks.
The company also ended contracts with 150 customers this past quarter — three times the amount of customers lost the previous quarter. The ex-customers either couldn’t pay their bills or voluntarily cancelled their contacts. Akamai executives said that customer turnover could remain high for another quarter or two — they expect to lose as many as fifty more customers this quarter.
Despite the attrition, Akamai’s customer base is growing. They have almost 1,500 customers, including Apple, which just recently renewed its contract. That’s a big win — Apple represented about 12 percent of the company’s annual revenue last year, according to Akamai. Company chairman George Conrades expressed confidence that the company will break even by the second quarter of 2002.
Although the company says it’s still well-funded to make it that far, they’re not taking any chances. With $313 million in cash and securities in reserve, the company’s burn rate for the rest of the year is expected to be as much as $240 million. Looking to cut corners, the company is planning on saving $15 million or so by cutting loose 14 percent of its workforce.
Excluding one-time charges, Akamai’s net loss was around $52.5 million — more or less in line with what market analysts were expecting. The company’s revenue was in line with revised guidance offered earlier this month. Akamai is expecting a modest revenue increase this quarter.