"routs traffic" is right :-)
Akamai surges to 165 in first day of trading
By Mike Ricciuti and Scott Ard
Staff Writers, CNET News.com
October 29, 1999, 10:45 a.m. PT
update Web content delivery service Akamai Technologies joined the
list of high-flying initial public offerings when its shares opened
for trading today at 110--a fourfold jump from its offering price.
Akamai's stock continued to rise after the opening, reaching 165 on
volume of nearly 6 million shares. At that price, the 18-month-old
company had a market capitalization of about $15 billion.
Prior to public trading, Akamai issued 9 million shares at $26 per
share, giving it a market capitalization of $2.35 billion.
The Cambridge, Massachusetts-based company had raised its IPO range
three times, most recently on Wednesday, when Akamai upped its range
to $21 to $23 per share and also increased the number of shares it
would offer to 9 million from 8 million. Last week Akamai increased
its price range to $16 to $18 a share, up from its original range of
$11 to $13.
Based on the $26 offering price, Thomson Leighton, the company's
chief scientist, had a stake worth $249.6 million; Daniel Lewin, the
company's chief technology officer and other co-founder, had a stake
worth $247 million. Leighton is a professor at the Massachusetts
Institute of Technology now on sabbatical, and Lewin is a doctoral
Akamai--pronounced "ACK-uh-my," a Hawaiian word that means clever or
cool--sells FreeFlow, a service that speeds Internet delivery by
linking 1,475 computer servers in 24 countries through 55
telecommunications networks. Companies such as Yahoo and CNN.com
place their content on those servers.
Akamai says it transmits data 2 to 10 times faster than Yahoo because
it routs transmissions around busy points of the Internet. Akamai is
one of several new Web-caching companies, so called because content
is "cached," or stored, on computers linked to the Internet. More are
likely to go public as demand for their services increases, analysts
The company had $1.29 million revenue in the nine months ending
September 30, mostly from contracts with Apple Computer and Yahoo,
and lost $28.3 million before paying deferred stock dividends. In the
same period a year ago, it had no revenue and lost $890,000.
Akamai, which trades on Nasdaq under the symbol "AKAM," has several
industry giants in its corner. For example, Cisco Systems in August
entered into a strategic alliance with the company to develop new
content routing, switching, and caching technologies to accelerate
the delivery of Web content.
Akamai's IPO comes at a time when the small yet competitive Internet
content distribution industry is in rapid flux. Analysts expect the
nascent market, which revolves around getting Web content to end
users faster by keeping it off the most congested parts of networks,
to grow to $2.5 billion by 2002.
Bloomberg contributed to this report.