ATTN ALL: This is very big and could result in 50-70 point gain in isld near term imo as this places ISLD in hottest momentum area:
From Briefing.com this morning:
08:38 ET Digital Island (ISLD) 23: Provider of network services for e-Business applications agrees to merge with privately held Sandpiper Networks. Deal valued at approx. $620 mln. ISLD bid up 3/4 on the news.
NOTE: see #4 on Sandpiper at bottom of AKAM analysis: AKAM ipo scheduled for trading 10/28-10/29
*HIGHLIGHTS OF UPCOMING IPOs AND SMART!IPO ANALYSIS*
Akamai Technologies (Nasdaq:AKAM)
--> Summary
Akamai Technologies provides an Internet content delivery service
that improves Web site speed and reliability and protects against
Web site crashes due to demand overloads.
As the number of Internet users grows each year, so does the demand
placed on current telecommunications networks. Not only is the
number of users growing, but the amount of data that is being
delivered is growing as well: it has been estimated that Web
traffic is doubling every 90 days. This is due to more bandwidth-
intensive applications such as streaming audio/video.
The delays caused by overloaded networks has a direct economic
impact on companies seeking to do business via the web: a recent
report by Zona Research estimates that $4.35 billion in e-commerce
sales is lost annually because customers log off their machines due
to slow download times.
To help data flow faster and more efficiently across the global
Internet network, several technologies have been employed:
1) Caching: This places a copy of Web content at strategically
placed servers around the globe to reduce the distance between the
web user and the content that is being delivered to the user.
However, caching requires the copy to be frequently updated manually
since it is not dynamically updated as content changes on the Web
site.
2) Increased Bandwidth: High-speed Internet access services such
as Digital Subscriber Lines (DSL) and cable modems speed the flow of
content as it is delivered to the Web user. However, this doesn't
completely address the speed problem since content can be delayed at
several points along the Internet where different networks
interconnect, and therefore bottlenecks can and do occur.
3) Outsourced Server Management: Web site owners frequently
outsource the management of the servers (computers) that host the
web site to third parties that can offer faster Internet access and
larger server capacity. However, increased server capacity and
faster transmission speeds are sometimes offset by the bottlenecks
that data run into when data is being transmitted from these servers
to the Web user.
Akamai has found another way to speed data along the Internet.
Akamai has developed its own proprietary network in which it houses
specially tagged content from highly trafficked web sites. When a
Web user accesses one of these web sites that has been "Akamaized",
special mathematical algorithms quickly determine which one of
Akamai's servers can deliver the content most quickly. Factors that
determine which server can deliver the content most quickly include
the geographical proximity to the Web user and the current traffic
demands placed on each of the servers.
--> Investment Analysis
There are several factors leading to our position that Akamai
Technologies will be a strong performer, including:
1. Attractive Revenue Model. Akamai is compensated based on the
amount of content that it delivers via its own Web servers.
Accordingly, its revenues will grow as the Internet grows, which is
a big plus given the growth potential of the Internet. In addition,
this recurring revenue model has a very low associated cost to
enable it: Akamai uses off-the-shelf, inexpensive components made
by other companies to deploy its technology; large amounts of
capital are not needed to upgrade any old networks or expand new
ones.
2. Strong Strategic Partners. Akamai has partnered with three
prominent industry leaders: Microsoft (Nasdaq:MSFT), Cicso
(Nasdaq:CSCO), and Apple (Nasdaq:AAPL). The partnership with Cisco
is especially attractive as the two companies have agreed to
integrate Akamai's technology into Cisco's current networking
products. Cisco has an enormous marketing reach that will enable
Akamai to sell its products on a scale that it could have never done
independently.
3. Experienced Management. Akamai's management draws its
experience from such industry leaders as GTE (NYSE:GTE), IBM
(NYSE:IBM), Time Warner (NYSE:TWX) and MCI WorldCom (Nasdaq:WCOM).
4. Unique Competitive Position. Currently, there is only one
direct competitor to Akamai's product -- privately-held Sandpiper
Networks. With a technology that is in extremely high demand, a
lack of significant competition, and an enviable partnership with
the strongest networking company in the world, the market will
likely put a hefty premium on Akamai's shares. |
