Limelight’s Share Surge: Don’t Celebrate Yet

Content delivery network Limelight Networks’ shares surged nearly 20 percent Friday after saying it expects fourth-quarter revenue to come in at the high end of its previous guidance. The bad news is that the sales are estimated to range from $29.3 million to $30 million, essentially flat compared with the previous quarter.
Given that there’s a price war among the big CDNs, a war that last fall prompted Level 3 to announce it would take its CDN prices to about half the going rate, Limelight’s (LLNW) stable sales may be largely due to deep discounting. As Limelight spends about 60 cents on every $1 it earns just to provide service, whereas Akamai spends about 30 cents, I’m not sure how low Limelight can go. Or for how long.