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.

Interesting: Covad, Vonage, SkypePhone, Akamai HD, Hypres & Apple Airport

[qi:076] Covad to be acquired by Providence Equity Platinum Equity Partners for $1.02 a share in cash, a 59 percent premium to its closing price on Friday. Covad is one of the handful of independent broadband service providers to have survived the telecom bust. Providence, I suspect, will have Covad focusing on wholesale and wireless broadband. Maybe it is time for the private equity guys to take a cold, hard look at EarthLink (ENLK).

[qi:017] Vonage and Verizon kiss and make up. The patent fracas is going to end with a settlement that will see Vonage (VG) paying out either $80 million or $120 million. Vonage has seen seeking a rehearing of its case, and if it wins, Verizon (VZ) gets $80 million. No one can tell me that this patent mess isn’t about the money. The ironic thing is that the shareholders who bought into Vonage’s independence have seen their dollars end up in the pockets of the incumbents.

[qi:83] Skype launches 3SkypePhone. It was rumored for a while, but Skype (EBAY) and 3 have launched a Skype-branded phone that lets 3 customers make free Skype-to-Skype calls and send free Skype instant messages from their mobile phone to other Skypers by pushing a single Skype button on the phone.

[qi:032] Akamai shows how HD is done. Is the Net ready for HD video? Akamai (AKAM) says yes, and puts up a site for show-and-tell.

[qi:045] Hypres combines superconductivity with software radios. Hypres, a superconductor maker that we recently profiled, has signed a deal with SELEX Communications, a division of Finmeccanica Company (a huge defense and high-tech company in Italy), to develop an all-digital receiver for the SELEX Communications software-defined radio.

[qi:012] How good is Apple Airport Extreme (AAPL)? Information Week thinks it is better than the rest. It’d better be, given how expensive the damn thing is.