For Immediate Release
Chicago, IL – August 13, 2010 – Zacks.com Analyst Blog features: Akamai Technologies Inc. (AKAM), Level 3 Communications Inc. (LVLT), Limelight Networks Inc. (LLNW), International Business Machines Corp. (IBM) and Pepco Holdings Inc. (POM ).
Here are highlights from Wednesday’s Analyst Blog:
Akamai Partners with Brightcove
Akamai Technologies Inc. (AKAM), a leading provider of cloud optimization services, has formed an alliance with the cloud-based video platform company, Brightcove. The alliance is expected to make video publishing and distribution easier for all sizes of professionals and business organizations over the Internet.
Online video is gaining huge popularity with an increasing use of the Internet and a plethora of mobile devices in the market. Marketers, big and small alike, are using online videos to attract, engage and retain audiences globally.
According to research firm eMerketer, 33% of online adults in the US, or 58.9 million people, will watch full-length television shows online in 2010 on a monthly basis. Among adults who already watch video regularly online, the rate is even higher, at 50% at the end of June.
Currently, there are only a few cloud-based companies in the market who have adequate expertise in producing high definition videos over the net.
Akamai through its HD network provides a smooth and interactive platform to its global customers for their online video products. On the other hand, Brightcove offers solutions that deal with video content management, encoding, publishing, monetization and analytics.
The alliance aims at improving quality and performance and provides innovation to high definition (HD) online videos across a diversified customer base, which includes the leading media, e-commerce and enterprise companies as well as small businesses around the world.
Brightcove will provide the Akamai HD Network service as a part of its online video platform. We believe the partnership will be beneficial for Akamai as it will enable it to meet the growing demand for innovative online videos of high quality in a short span of time.
Recommendation
We maintain a Neutral recommendation on Akamai on a long-term basis (6 to 12 months), due to increasing operating expenses, higher capital expenditure and a sluggish macroeconomic environment.
Akamai continues to face stiff competition from large companies such as Level 3 Communications Inc. (LVLT) and Limelight Networks Inc. (LLNW).
However, we believe an increasing usage of cloud computing technology and partnerships with companies such as International Business Machines Corp. (IBM) and Brightcove will boost its profitability going forward.
Currently, Akamai has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.
Pepco Signs Energy-Saving Contract
Diversified energy company Pepco Holdings Inc. (POM ) announced that its subsidiary, Pepco Energy Services, signed a $35 million comprehensive energy savings performance contract with Prince George’s County Maryland Public Schools.
As per the contract Pepco will provide 103 county schools with new infrastructure for effective utilization of energy. The company will emphasize on modernizing heating, cooling and ventilation, conservation of water, improvement in lighting system, energy controls and renewable energy systems.
Pepco will start work on the project immediately, which is expected to save Prince George’s County Public Schools roughly $3 million annually. This project is expected to save $74 million in energy usage over the next 13 years following completion of all phases. It would also help reduce greenhouse gas emissions by 30 million pounds of carbon dioxide a year.
Pepco is consistently entering into efficient energy savings contracts, which not only ensure efficient use of energy but decrease the emission of greenhouse gas. Since 1995 Pepco Energy Services has developed, implemented and financed over $750 million of energy-saving performance contracts for more than 300 customers.
The adjusted earnings for Pepco at the end of the second-quarter 2010 were 56 cents per share, compared with $1.24 at the end of the second-quarter 2009. The Zacks Consensus Estimates for third-quarter 2010, fiscal year 2010 and fiscal year 2011 are 42 cents, 90 cents and $1.23 per share, respectively.
We retain a short-term Zacks #2 Rank on the stock, which translates into a ‘Buy’ rating. We believe the strength of the company lies in its stable customer base, high priced contracts, high dividend yield and gradually-improving fundamentals at its core regulated gas and electric utility operations. However, the company is likely to face stiffer competition from its fully regulated peers with comparable dividend yields. Hence, we maintain a Neutral rating (6+ months) on the stock.
Based in Washington, District of Columbia, Pepco Holdings, through its two operating divisions, Power Deliver and Competitive Energy, involves in transmission and distribution of electricity, as well as delivery and supply of natural gas.
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