Did You Buy Akamai? Bully for You

Akamai's stock has climbed more than 25% after the company's fourth-quarter earnings report showed profit and revenue are still possible in this economy.
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SAN FRANCISCO -- As happy as tech investors look to be at the end of this week,

Akamai Tech

(AKAM) - Get Report

shareholders are in an even better mood.

The Internet services provider's stock has climbed more than 25% this week after the company's fourth-quarter earnings report showed that opportunity still exists for some firms to continue growing profit and revenue amid the economic slowdown.

On Friday, shares were up 37 cents, or 2.2%, to $17.10.

Akamai said Wednesday that revenue climbed 16% in the fourth quarter, while profit rose 13%.

Three months ago, the company posted third-quarter revenue growth of 22%, while profit jumped 37%.

Akamai's fourth quarter was helped by two months of revenue contribution from its acquisition last November of online shopping-data site Acerno, but considering what we've seen from tech companies' earnings reports over the past few weeks, any sort of double-digit top- or bottom-line growth has to garner some respect. (Remember what we've seen from the likes of

Dell

(DELL) - Get Report

,

Yahoo!

(YHOO)

, and any semiconductor company).

Several Wall Street analysts proceeded to heap praise on Akamai on Thursday, with the stock getting an upgrade to buy from Citigroup.

Akamai's core business involves helping companies speed up their their Web-content capabilities, but ironically it was Akamai's e-commerce operations that were strong in the quarter, as Friedman Billings analyst David Hilal pointed out in a research note on Thursday.

The company's e-commerce segment grew 23% year over year in the fourth quarter. As Akamai executives pointed out, online sales are still expected to grow 11% in 2009. That's a slowdown from 2008, but it supports the company's claims that e-commerce customers are still gravitating toward Akamai's help in making their sites more dynamic and personalized.

But what is even more significant, as Merriman Curhan Ford analyst Richard Fetyko pointed out on Monday, is that Akamai benefits less from online sales than it does from Web

traffic

-- that's where the fees are, and that is what will continue to grow.

Fetyko said the company will add only 115 new customers in 2009 as opposed to 2008, and average revenue per customer growth will slow to 4.4% this year.

But the analyst also said the unpleasant macro-environment has been baked into the shares.

Why do we listen to Fetyko? Because he slapped a buy on the stock on Monday, and he made you a 30% profit this week if you followed his advice.

This isn't to say that other analysts, and even Akamai itself, aren't cautioning about the continued limited visibility in when business will pick up. FBR's Hilal rightly questioned how well the company is going to manage pricing with its higher-margin value-added services. Hilal trimmed his price target on the stock to $18 from $19.

For investors who missed out on this week's march higher that took the stock's trailing-12-month price-to-earnings ratio of 22, there may not be another 25% move in the near future.

But for the longer term, how many tech companies will deliver 10% revenue growth this year and next?