NEW YORK (TheStreet) -- Shares of Limelight Networks Inc. (LLNW) are up 10.6% to $3.13 after it announced it rejected an unsolicited takeover bid from Tuition Build Inc., a Silicon Valley private equity firm.
Tuition Build had offered to purchase and take Limelight Networks private for $644.7 million, or $6.55 per share.
Said Limelight: "Tuition Build does not have the experience, credentials, financial resources, or capability to complete the proposed transaction."
TheStreet Ratings team rates LIMELIGHT NETWORKS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIMELIGHT NETWORKS INC (LLNW) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, LIMELIGHT NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$2.09 million or 178.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 48.14% is the gross profit margin for LIMELIGHT NETWORKS INC which we consider to be strong. Regardless of LLNW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LLNW's net profit margin of -18.55% significantly underperformed when compared to the industry average.
- LIMELIGHT NETWORKS INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LIMELIGHT NETWORKS INC reported poor results of -$0.36 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.26 versus -$0.36).
- The revenue fell significantly faster than the industry average of 21.3%. Since the same quarter one year prior, revenues fell by 10.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- You can view the full analysis from the report here: LLNW Ratings Report