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					S&P Value Fair Value Strategy Consider Sell Moat Industry
57.00    66.00       Buy        84.00         Yes   Technology




                          STOCK ANALYSIS
                           October 25, 2010



                                Group 3
                              Jeremy Jackson
                             Matthew Hanley
                            Courtney Murchison
                               Charlie Roch
                             Tarah Shinpaugh
                             Haley Thompson


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S&P Value Fair Value Strategy Consider Sell Moat Industry
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Theme
        Akamai Technologies is one of the world’s leading internet services companies.
With over 72,000 servers in seventy different countries, Akamai is known for its market-
leading, cloud-based services for optimizing Web and mobile content and applications,
online HD video and secure e-commerce. Founded in 1998, Akamai has been recognized
in the 2010 Businessweek Worldwide Technology 100, Forbes 2009 List of “25 Fastest-
Growing Technology companies in America”, Business 2.0 as one of the “100 Fastest-
Growing Tech Companies of 2007” and number two in the Stock Returns category
during 2006. (Akamai)


        Akamai has continued to increase revenues year over year earning $859.8
million in 2009 compared to Limelight –one of its closest competitors- who earned
revenues of $131.7. Akamai has been able to prosper in this highly competitive field
through innovation and rapid deployment of services to meet consumer demands for
rich online content at affordable rates. One portion of the firm’s growth in recent years
has come from acquisition of competition. Netli and Velocitude are recent purchases
and both have enhanced technological capabilities and expanded the consumer base.
(Akamai)


        Although Akamai provides its services on the global market, its primary
customers are in the United States. Major U.S. customers include: Apple Inc., Hitachi,
NASDAQ, and the US Department of Defense. Akamai helps its customers maximize the
value of their respective brands by helping to bring an end to “World Wide Wait” for its
client’s web presence. (Akamai) The purpose of this report is to analyze every aspect of
Akamai Technologies and provide a reasonable analysis of why potential prospectors
should invest in this company.



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S&P Value Fair Value Strategy Consider Sell Moat Industry
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Business Analysis:


Company Profile
       Akamai Technologies, Inc. was founded in 1998 and is headquartered in
Cambridge, Massachusetts. Akamai Technologies is in the technology sector, specifically
in the internet industry by offering an accelerated course to digital delivery. The
company's technology enables corporations and government agencies to deliver
content and applications, such as ads, business transaction tools, streaming video, and
Web sites over the Internet. It also offers the EdgeControl suite of tools that supply
network data feeds and Web site analytics to customers. By using a network of servers
distributed across the globe, Akamai analyzes and manages Internet traffic by
transmitting its customer’s content from the server geographically closest to the end
user. Akamai has about twenty global offices, but most sales are made in the US.


       Akamai Technologies, Inc. provides services for accelerating and improving the
delivery of content and applications over the Internet. The company offers Application
Performance solutions that improve the performance of dynamic applications used by
enterprises to connect with their employees, suppliers, and customers. Its Application
Performance solutions include web Application Accelerator, which enables enterprises
to run various applications, and IP Application Accelerator, that is designed to address
core Internet weaknesses to optimize the performance and real-time sensitivity
associated with IP-enabled applications delivered over Internet-related protocols. It also
provides Digital Asset solutions that enable enterprises to execute their large file
management and distribution strategies.


       The company’s Digital Asset solutions include Akamai Media Delivery solution
that delivers media content on behalf of its customers; and Electronic Software Delivery
solution, which handles the distribution of software for its customers. In addition, it
offers Dynamic Site solutions, which accelerate business-to-consumer Websites that

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S&P Value Fair Value Strategy Consider Sell Moat Industry
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integrate collaborative content and applications into their online architecture;
Advertising Decision solutions that enable advertisers, agencies, publishers, and
networks to buy and sell advertising; and custom solutions to commercial and
government customers. These primarily relate to collecting statistical data regarding
exposure and penetration rates in a given market demographic.


        Additionally, the company offers other solutions, such as network data feeds and
Website analytics, which provide customers with real time data about the performance
of their content and applications over the Internet; and performance management
services that help customers better understand their Web operations with tools that
measure various aspects of an application’s performance. Essentially, in more simple
terms, what all of this means is that if you have content that you need to be put on the
web, managed, reported on, or delivered to customers, Akamai is the company who can
do it for you.


Industry Analysis
In order to analyze this industry, an investor must first decide specifically what industry
Akamai was in. Our team used the following methodology: The North American
Industry Classification System places Akamai under the code 54512. This code can be
broken into components to determine its classification. The first two digits, 54 indicate
professional, scientific, and technical services. Within the 54 code Akamai has a sub-
code of 512 which corresponds with computer systems design services.


        This U.S. industry comprises establishments primarily engaged in planning and
designing computer systems that integrate computer hardware, software, and
communication technologies. The hardware and software components of the system
may be provided by this establishment or company as part of integrated services or may
be provided by third parties or vendors. These establishments often install the system
and train and support users of the system.

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S&P Value Fair Value Strategy Consider Sell Moat Industry
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       In this industry, there are really only four major players, each trying to establish
as much stake in the industry as they can. These players are Akamai Technologies, Level
3 Communications Inc., Limelight Networks Inc., Mirror Image Internet Inc.


Company Analysis and Major Product Prospects
       As the use of the Internet advances, so does Akamai. From their annual report,
Akamai expects to see three trends shaping the future of the Internet and their business
in the years ahead – the growth of cloud computing models for enterprise-class
applications of information technology (IT), the adoption of high definition (HD) video
online, and the shift of advertising dollars online to follow the migration of audiences to
new media. In order for Akamai to continue to be profitable, they will have to be major
players in the Cloud computing, HD streaming, and Online Advertising markets. The
following is how they plan on doing just that.


       Cloud computing, the buzz-word of the past few years across the IT industry, is
quickly becoming a reality. The notion of moving applications out of the data center and
into the “cloud” is gaining traction. Not only does this shift to the cloud offer significant
cost savings to enterprise customers across all verticals, but it also creates a flexible way
to manage assets and applications. Akamai’s customers require access to anyone,
anywhere, anytime as globalization and mobility trends continue to advance – and while
customers want to achieve the cost savings that come from cloud computing, they
cannot afford to sacrifice performance.


       As this evolution in computing proceeds, the focus on performance and cost
efficiency of an enterprise’s application environment fundamentally shifts from the data
center to the cloud. We believe that Akamai is uniquely situated to address these
imperatives with cloud optimization services, such as Application performance Solutions.



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The year of 2009 demonstrated that Akamai has played an increasingly important role in
improving the performance of customers’ mission-critical applications and systems
online. Notably, Akamai saw significant growth in providing fast, reliable, and secure
web application acceleration for numerous Software as a Service (or SaaS) companies.
SaaS transactions on the Akamai network alone have grown twenty times in the past
three years.


       Platform as a Service (or Peas) and Infrastructure as a Service (or Iasi) are two
additional opportunities in the cloud computing market where Akamai’s cloud- based
technology can be used to accelerate application performance over the Internet.
Akamai is continuing to focus on product innovation in this market. For example, the
introduction of their Web Application Firewall service in 2009 was designed to extend
the rules of customers’ firewalls to the edges of the Internet, so that any attack on a
customer’s origin site is resisted by Akamai’s massively distributed network, rather than
at the customer’s data center.


       They believe their new cloud computing services will be an in-road to new
markets such as financial services, healthcare, and technology consulting and services
where security is a high priority. As enterprises increasingly look to the cloud for more
cost-effective answers to meet their IT needs, they intend to expand their portfolio of
services to meet those needs and to enable the adoption of more cloud computing
services enhanced by Akamai.


The Akamai HD Network
       Simply put, video distribution online is changing the media industry. With the
increase in high-speed last mile connectivity and the proliferation of new Internet-
enabled devices, the amount of time that consumers are spending on the Internet for
entertainment and information has continued to grow, and more of that time is spent
consuming high-quality online video. As a result, Akamai customers have been shifting

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S&P Value Fair Value Strategy Consider Sell Moat Industry
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their businesses, making more and more high-quality, rich media content available to
consumers online. As this occurs, the ability to deliver massive amounts of HD video
online – at scale, with high quality, and cost-effectively – becomes a major challenge for
enterprises.


        In 2009, Akamai introduced the Akamai HD network, their revolutionary
approach to addressing the future of HD video delivery. The Akamai HD network is
designed to enable enterprise media customers to provide millions of consumers with
an online HD experience much like the TV experience to which we are all accustomed.
For their customers, this can be managed from a single network for all major formats
and encoding rates, eliminating much of the cost and complexity of bringing new video
content online. Beyond just delivering video, they also provide their customers with the
analytics and other capabilities they need to better understand and manage their online
media businesses. Akamai has differentiated itself from traditional ISPs in that it hosts
media for the client company, as opposed to merely providing network access for
content delivery.


Advertising Decision Solutions
       As audiences shift to the Internet and more entertainment and information
content moves online, advertising budgets have been following target audiences and
shifting to the Web as well. Akamai believes that a key enabler for online advertising is
an accountable, real-time, data-based approach to ad placements that gives marketers a
way to better measure and manage the effectiveness of their campaigns. During the
year, they celebrated the one-year anniversary of the successful acquisition of Acerno,
integrating a unique data co-op into their Advertising Decision Solutions offering. The
marriage of this data cooperative with sophisticated and proprietary predictive models
is designed to increase the effectiveness of their customers’ online ad campaigns.




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S&P Value Fair Value Strategy Consider Sell Moat Industry
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        Akamai further enhanced their solution by tightly integrating it with their
Dynamic Site Accelerator solution for e-commerce customers, and introducing a pixel-
free approach for predictive advertising that enables faster time-to-market for ad
campaigns that do not tax our customers’ IT resources. Looking forward, Akamai
believes that their ability to manage and utilize predictive data on a real- time basis,
combined with their strong relationships with publishers, advertisers, and advertising
networks, puts them in a unique position to help customers as the online advertising
business continues to evolve.


Financial analysis:
        The comments below interpret some of the forecast assumptions and also
elaborate on drivers of trends evident over the 5 year period.


Sales Growth – Assumption – increasing sales
       Akamai is poised to be the “go-to” technology enabler for a number of firms
exposed to explosive growth over the medium term. Netflix, for example, as one of
AKAM’s most popular customers is on a path to surpass several major cable TV
networks in the next 5 years. This will bring a significant growth in NFLIX usage of AKAM
networks with a corresponding increase in revenue. AAPL is another company poised to
significantly grow its streaming needs in the next five years. AAPL will likely adopt a
cloud-based model for its iTunes ecosystem in order to allow users to access purchased
content anywhere, any time. Both NFLIX and AAPL are companies with a strong interest
in getting the presentation of digital content in the living room “right” and AKAM is the
provider of distribution for both.


       In addition to a stable of valuable companies with strong growth prospects,
AKAM will likely see sales growth from other firms seeking to enter the digital
distribution market. Major TV networks are a possibility in this regard. Each network is
currently implementing a different solution to bring content to users directly (further

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           S&P Value Fair Value Strategy Consider Sell Moat Industry
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           squeezing the current cable providers) – and AKAM has the potential to become the
           conduit for one of the major networks.


                  These factors combine to create a very positive outlook on the firm’s sales
           growth. After evaluating the firm’s asset and income history, the firm has not taken on
           large amounts of debt to finance its growth, choosing instead to use cash from
           operations. Should the firm choose to continue this strategy, growth will be capped by
           the cash available from operations, some steady debt growth and new equity issues.


                  Tying this together, sales growth is projected at around 18% over the next five
           years with a taper toward the end of that interval as the current forecasted digital
           transition completes. It is extremely unclear what form content consumption, creation
           and distribution will take beyond the horizon of the current cycle. AKAM may adapt well
           and find itself well positioned for continued growth.


Period
Ending     31-Dec-14      31-Dec-13      31-Dec-12     31-Dec-11    31-Dec-10    31-Dec-09      31-Dec-08   31-Dec-07
           Projected      Projected      Projected     Projected    Projected

Total
Revenue   1,916,394.40 1,652,064.14 1,400,054.35 1,186,486.74 988,738.95 859,773.00 790,924.00 636,406.00
Revenue
Growth        264,330        252,010        213,568       197,748      128,966       68,849       154,518
Revenue
Growth
%              16.00%         18.00%         18.00%       20.00%       15.00%        8.70%        24.28%
Cost of
Revenue        496546         456546         386465       336654       294675       249,938       222,610    167,444
COGS %         25.91%         27.63%         27.60%       28.37%       29.80%        29.07%        28.15%     26.31%
Gross
Profit    1,419,848.40   1,195,518.14   1,013,589.35   849,832.74 694,063.95        609,835       568,314    468,962
Gross
Margin         74.09%         72.37%         72.40%       71.63%       70.20%       70.93%        71.85%      73.69%




           Margins

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          S&P Value Fair Value Strategy Consider Sell Moat Industry
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                 In general, it appears to be reasonable to expect AKAM to reach further scales
          with its network growth and for distribution packages to become in a general decrease
          in all margins. COGS is expected to fall as network efficiency increases along with more
          clients purchasing similar services from the firm.


          2010 EPS Numbers
                 We project an EPS for 2010 in the realm of $1.00, reflecting significant growth of
          sales in client firms reporting for Q3 2010.


                 Capitalization – AKAM’s stable interest expenses and debt balances are evidence
          of cash from operations being significant to finance growth. However, it is expected for
          the firm to access the equity markets over the next 5 years for additional capital to
          finance growth. The firm’s rising stock price will make this re-capitalization a rather
          cheap source of capital over this term.


                 AKAM has a debt/equity ratio under 5% at present, a sign that interest expenses
          are well under control. Its current ratio, or calculation of current assets divided by
          current liabilities is 3.89, meaning that in general, 3.89 dollars exist to pay every current
          bill. The company is poised for growth and has a wide range of options for future capital.
          Should AKAM need to borrow in order to finance further growth or enhance
          shareholder returns, it is in excellent financial condition to do so.


                 Tax Rates – Tax Expense, as a percentage of EBIT should decline or remain stable
          over the forecast period due to growth of international distribution sales.




                                                                                       31-Dec-     31-Dec-   31-Dec-
Period Ending        31-Dec-14    31-Dec-13    31-Dec-12     31-Dec-11    31-Dec-10        09          08        07
                     Projected    Projected    Projected     Projected    Projected



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Income from
Continuing
Operations
Total Other
Income/Expenses
Net                       12654       11654        12646        15644        17456     16,591     25,096   26,363
Earnings Before
Interest And
Taxes                682,082.40 564,620.14 471,824.35 393,765.74 306,461.95 240,071 237,360 171,291
Interest Expense          3865       3465       3654       3143       3024    2,839   2,825   3,086
Income Before
Tax                  678,217.40 561,155.14 468,170.35 390,622.74 303,437.95 237,232 234,535 168,205
Income Tax
Expense                 245645     198465     164654     134654     114564 91,319 89,397 67,238
Tax Rate                36.01%     35.15%     34.90%     34.20%     37.38% 38.04% 37.66% 39.25%
Net Income           432,572.40 362,690.14 303,516.35 255,968.74 188,873.95 145,913 145,138 100,967
Earnings Per
Share                      $1.84       $1.54        $1.41        $1.19        $1.00     $0.77  $0.78   $0.55
Common Stock             235465      235465       215434       215434       188658    188658 186,685 185,094




                   Summary - AKAM is a tightly run firm with a low debt expense, declining actual
          tax rate and expected rises in economies of scale. Significant business growth of client
          companies will serve to drive increased revenues throughout the next business cycle. It
          is expected that as content producers and consumers create a marketplace for digital
          content over the next 5 years, that AKAM will reap excellent profits in providing the
          distribution and connectivity for both parties. Recent announcements from Netflix and
          Level 3 regarding a contract for streaming content delivery may affect AKAM in future
          earnings periods. AKAM still retains excellent earnings opportunities, however, it will be
          important to monitor the effect of Netflix shifting its business. AKAM as a standalone
          firm is very healthy, but it is unclear what synergies exist in the market to make it an
          attractive M&A target.


          Valuation:
                   The stock evaluation model we used to evaluate Akamai’s stock is composed of

          the following factors: the growth of the industry, the demand for business, and Akamai’s


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               S&P Value Fair Value Strategy Consider Sell Moat Industry
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               efficiency to keep up with supply and demand in their market. We believe that global

               consumers will increase their reliance on the internet as their primary source for news,

               entertainment, shopping, and travel arrangements. Studies also show that society will turn

               to the web more frequently to engage in social networking and other forms of

               communication.

                        In theory, we expect businesses to respond to the surge by expanding the

               functionality and richness of their web offerings, changing the way they personalize

               online offers, and increase the total number of products and services they provide online.

               With that stated, “Cisco is projecting that Global IP traffic will grow at a 39%

               compounded annual growth rate between 2009-2013 and that mobile data traffic will

               grow at more than twice that rate” (Morning star.) We feel that Akamai will continue to

               be a leader in the industry and increase their market share more than their current 73,000

               servers, in 70 countries, within nearly 1,000 networks. This means that 85% of the

               world’s internet users are within a single “network hop” of an Akamai server.



                       The free cash flow model analysis for the next five years is calculated by using a

               free cash flow growth rate of 17% and a terminal growth rate of 5%. It also includes a

               required rate of return of 9% when using the CAPM model with a beta of .77. All of the

               combined data gave us an intrinsic value of $84.




Free cash flow available to equity
holders (FCFE) (million)             $   316.00
Estimated FCFE growth rate for
next five years                            17%

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                  S&P Value Fair Value Strategy Consider Sell Moat Industry
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 FCFE growth rate after five years               5%
 Required rate of return                         9%
 # of shares (million)                          181


 Year                                              0            1        2         3          4                  5        6

 FCFE                                 $         316 $          370 $    433 $    506 $      592 $           693 $        811

 Value of total equity                                                                                $   20,265


 Present value of Cash Flow                                $   339 $    364 $    391 $      419 $           450

                                                                                                      $   13,171

 Value of Equity today                $       15,135

 # of shares (million)                $         181


 Stock Price                          $          84


                           Because $84 seemed to be too high from the current market price of $47, we

                  became more aggressive with the required rate of return and used 10%. This calculation

                  gave us an intrinsic value of $66. Therefore the stock is undervalued and is a Commodity.



Free cash flow available to equity
holders (FCFE) (million)                  $    316.00
Estimated FCFE growth rate for next
five years                                       17%
FCFE growth rate after five years                 5%
Required rate of return                          10%
# of shares (million)                            181
Year                                                   0            1        2         3          4                  5         6

FCFE                                      $       316 $         370 $    433 $    506 $      592 $               693 $    811
Value of total equity

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                                                                                                           $   16,212


Present value of Cash Flow                              $     336 $         357 $      380 $       404 $            430

                                                                                                           $   10,066

Value of Equity today                     $   11,975

# of shares (million)                     $       181



Stock Price                               $        66



                  Bulls vs. Bears:
                  Bulls
                           Akamai is a technology driven company. As technology increases and becomes
                            less expensive to the consumer, more people are accessing their television
                            shows and movies online. As time progress and technology continues to
                            improve, Akamai’s growth possibilities are almost unlimited due to the shift in
                            content consumption trends.


                           As consumer’s lives become busier and convenience becomes a priority,
                            streaming their favorite television shows and movies becomes an easier way to
                            watch their favorite shows or movies when and where it is convenient for the
                            consumer. Akamai stands to benefit by enabling content producers a channel to
                            distribute their assets directly to consumers


                           Akamai is also in a very favorable position to provide advertisers access to
                            millions of consumers who purchase or stream content from its network.
                            Akamai’s client list is a well-diversified group of companies in various industries.
                            From public-sector services funded by government spending, to major corporate

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        infrastructure deployments, to front-end consumer portals, Akamai is not
        dependent on the delivery of one particular type of content distribution model
        or service (Morning star).
       Some customers include Best Buy, Victoria’s Secret, NASA, NFL, and Red Bull.
        These companies are highly committed to Akamai, so they are unlikely to switch
        to another company.


Bears
       The competition that Akamai is up against includes Limelight Networks, Level 3
        Communications, and Mirror Image Internet (Yahoo! Finance.) Akamai is the
        largest and most popular of the four big competitors. All companies will possibly
        end up competing for the same market share, which in turn means lower
        prices. This will hurt the profit margin. The industries where Akamai competes
        include computer services, business services, consulting, web consulting,
        application service providers, and information technology services. Akamai must
        differentiate from its competition in order to be successful.


       Many people are committed to their cable television providers; this could be
        because they have been using the same company for several years, or it could
        just be because they like to channel surf.


       Akamai’s clients must compete against other firms in these entrenched markets.
        Many companies may be able to do their own streaming services. As many
        companies are cutting costs Akamai may be one of the first to go (Morning star).


The Moat:
        Akamai operates in an extremely competitive industry dominated by a constant
flow of new, game-changing ideas. The existing business relationships it has formed
allow it to rapidly respond to customer needs.


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        The business of content delivery requires a massive deployment of technology
resources at substantial cost. This both helps and hinders the firm. New competitors
must purchase and deploy cutting-edge hardware and also forge profitable relationships
with customers, however, the cost of existing infrastructure is nearly always falling while
newer hardware costs remain constant. Akamai faces a push-pull of outside firms
possessing the ability to duplicate its current offerings while being forced to invest in
new assets at a premium.


        While the firm’s moat is not as substantial as that enjoyed by firms such as Wal-
Mart and Microsoft, it is substantial in that its network is deployed and capitalized with
future costs comprising of either upgrades or incremental expansion. Competitors face
the need to build the soup to nuts solution while also shaving margin to win business.


        Akamai stands to benefit from the global shift in content consumption, and will
earn significant economic profits over that term. However, over the long term, content
distribution will become a commodity provided at lowest cost. It is unclear whether the
firm can offer superior returns over the long-term without further evolving its offerings.
The 5-10 year outlook is positive, with the current moat structure eroded heavily in that
timeframe.


Risk:
        Due to the highly competitive and innovative nature of today’s society, all great
companies come with risk. This is especially true of technological investments because
the market is intensely competitive, highly fragmented, and rapidly changing. Akamai
must continue to meet the varying needs of their customers by remaining innovative
and responding to emerging technological trends. (10k)




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        The firm must also prudently manage its growth. Since the launching of their
commercial service in April 1999, Akamai has experienced a steady growth both
internationally and in the United States. For this evolution to continue, Akamai’s team
must remain dedicated to find new resources for system adaptations. Because this
company is international, there is the risk of the business becoming affected by various
global economic and market conditions. Some of these affects could decrease revenues
and operating cash flows. (10k)


        Since its beginnings in 1995 by Tim Berner-Lee, Akamai conducts a large amount
of World Wide Web traffic including daily Wed transactions for well-known companies
such as NASDAQ and NBC. Some of Akamai’s operating risks are new to the business
world altogether. Distributed network attacks pose a risk to timely content delivery.
Akamai’s must safeguard its bandwidth and server infrastructure to continue its ability
to meet service level agreements. (10k)


        Akamai’s growth prospects expose t to financial risk, especially during the global
recession. Access to capital markets is often critical for expansion. Akamai must
maintain its ability to raise external capital in order to fund business growth beyond the
cash generated from operations. Also, Akamai faces many of the same risks that all tech
stocks possess; however, the internet appears to be a permanent fixture in the future
business environment. The firm’s growth depends on its ability to engineer relevant,
valuable solutions for its clients. (10k)


Investing strategy:
        While reviewing Akamai’s stock we feel that now is the perfect time to buy with
the stock being at 30% discount. Akamai is in a great position right now as it is a leader
in its industry while also a growth stock. “The industry will continue to grow significantly
over the next 5 years because of high demand of internet traffic from businesses and



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S&P Value Fair Value Strategy Consider Sell Moat Industry
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consumers” (Akamai). After holding the stock for three years we feel that you should
assess the risk and reevaluate your position to receive the best value for your portfolio.


Notes:
         Some highlights from Akamai’s 2010 10k:
         In 2005 Akamai acquired Speedera Networks, Inc. The purchase price was
$142.2 million which was comprised primarily of Akamai’s common stock. $137.4
million of the costs were allocated to goodwill and other intangible assets. Net income
for the years ended December 31, 2005, 2006, 2007, 2008, and 2009 included $5.1
million, $8.3 million, $7.4 million, $6.1 million, and $4.8 million, respectively for the
amortization of other intangible assets.


         In 2006, Akamai acquired Nine Systems for $157.5 million. It was comprised
primarily of their common stock. It was accounted under the purchase method of
accounting. $168.4 million of the costs were allocated to goodwill and other tangible
assets. Net income for the years ended December 31, 2006, 2007, 2008, and 2009
included $.1 million, $3.3 million, $4.1 million, and $4.4 million, respectively for the
amortization of other intangible assets.


         In March 2007, Akamai acquired Netli, $154.4 million under the purchase
method of accounting. Akamai allocated $148.4 million of the cost of this acquisition to
goodwill and other intangible assets. Net income for the years ended December 31,
2007, 2008 and 2009 included $0.7 million, $3.1 million and $4.0 million, respectively,
for the amortization of other intangible assets.


         In April 2007, Akamai acquired Red Swoosh for $18.7 million, consisting mainly
of their common stock. T $16.9 million of the costs were allocated to goodwill and other
intangible assets. Net income for the years ended December 31, 2008 and 2009



                                                                                            18
       S&P Value Fair Value Strategy Consider Sell Moat Industry
       57.00    66.00       Buy        84.00         Yes   Technology

       included $0.1 million and $0.4 million, respectively, for the amortization of other
       intangible assets.


              In November 2008, Akamai purchased Acerno $90.8 million in cash. This
       acquisition was accounted for under the purchase method of accounting. $100.3 million
       was allocated to goodwill and other intangible assets. Net income for the years ended
       December 31, 2008 and 2009 included $0.5 million and $3.1 million, respectively, for
       the amortization of other intangible assets related to this acquisition. Acerno is now
       their premium ad network. Akamai wanted to find a way to cut operating costs so they
       announced they would be cutting 110 jobs which was about 7% of its work force in
       November of 2008.


              On October 29, 2009 Akamai opened an internal investigation because an
       executive allegedly provided insider information to the people involved in the Galleon
       Group case.




       References:

"10k." Akamai: The Leader in Web Application Acceleration and Performance Management,

       Streaming Media Services and Content Delivery. Apr.-May 1998. Web. 25 Oct. 2010.

       <http://www.akamai.com/>.


Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Oct.-Nov. 2010. Web. 24 Oct.

       2010. <http://finance.yahoo.com/>.


"Akamai." Hoovers | Business Solutions from Hoovers. Oct.-Nov. 2010. Web. 25 Oct. 2010.

       <http://www.hoovers.com>.



                                                                                                19
      S&P Value Fair Value Strategy Consider Sell Moat Industry
      57.00    66.00       Buy        84.00         Yes   Technology


Morningstar Stock, Mutual Fund, Hedge Fund, ETF Investment Research. Oct.-Nov. 2010. Web.

      25 Oct. 2010. <http://www.morningstar.com/>.




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