The tricky thing about the limelight is that it can be a little blinding at first. Once your eyes adjust, you start to see things that appear a little darker.

So, too, with

Nasdaq

newbie

Limelight Networks

(LLNW) - Get Report

, which made one of the strongest debuts in the public markets so far this year.

What's the big deal? Limelight is in one of those rare but coveted markets in which demand is so hot that you can barely keep up with it. In Limelight's case, the market is network delivery of broadband content, which is, of course, exploding because people are sharing music files, watching baseball games and downloading videos of Paris Hilton being hauled back to jail on

Google's

(GOOG) - Get Report

YouTube or

News Corp.'s

(NWS) - Get Report

MySpace.

It's not just more applications -- it's bigger ones. Internet traffic is growing at 75% a year, about three times as fast as online advertising. Until now, the industry has been dominated by

Akamai Tech

(AKAM) - Get Report

, which even now has about six times as much revenue as Limelight and includes other big players such as

Level 3

(LVLT)

and

Internap

(INAP) - Get Report

.

But Limelight is growing even faster than Akamai, with revenue more than tripling last year and growing 111% in the first quarter of this year. To catch up further, the company held out its hat to the public market this month, and Wall Street responded by pouring in the cash.

Limelight fits the profile of a hot new stock. Its IPO was initially priced at $12, then raised to $14, then raised again to $15 at the last minute. Even then, the stock popped on its first day, rising as much as 62% to $24.33. It has since zigzagged around the $19 mark, trading recently at $17.98.

The company raised $188 million in the offering, while insiders made out by selling $53 million worth of their stock Most of the capital raised by the company will go toward investing in networks and the repayment of a $24 million credit facility. Limelight anticipates capital spending of $35 million this year and $45 million next year.

For the most part, observers are expecting good things from Limelight, at least in the near future. IPOHome.com said it expects "the near-term results out of Limelight to be very robust."

Jim Cramer said he considered it a momentum play -- no second coming of Akamai but plenty of gas in its tank for now.

But Akamai has shown its share of momentum swings. It has gone from less than $5 in 2003 to $60 this year before falling back to $41 last month, setting the stage for a warm welcome for Limelight's IPO. However, since that IPO, Akamai's stock has since recovered to about $47.50, in part from renewed interest in the sector from Limelight's strong debut.

But any good feeling between the two companies is likely to end there. There is a big dark cloud hanging over Limelight's head: a patent lawsuit from Akamai. Right now, the best thing about that litigation is that patent suits tend to take years to resolve -- hence the near-term investor affection that people such as Cramer and IPOHome are expecting for Limelight.

A year ago, Akamai and the Massachusetts Institute of Technology sued Limelight for infringing on two patents owned by MIT and licensed exclusively to Akamai. "Although Limelight notes that "a permanent injunction could prevent us from operating our CDN

content delivery network altogether," one could reasonably read that and think,

Well, such patent cases rarely lead to injunctions that could kill a company.

Not so with these patents. Akamai has sued two other companies, winning out in both cases one way or another. As Limelight said in its latest prospectus, in a subsequent bankruptcy proceeding of the first defendant, Akamai submitted a proof of claim for $30 million in damages, and this lawsuit was later settled for a lesser amount.

In addition, the second lawsuit ended only when Akamai acquired the defendant prior to final resolution of the case.

OK, but Limelight might find a favorable ruling from a different judge, right? Again, not so. "Both cases were filed in the same district court as the current action, and assigned to the same judge currently presiding over the lawsuit filed against us," Limelight's prospectus said.

In the meantime, another cloud hangs over Limelight's financials, if not the company's operations itself. After posting healthy profits in 2004 and 2005, Limelight posted a loss last year, not because of the rising costs of marketing and infrastructure that many start-ups face, but because of stock-based compensation.

That item grew from $100,000 in 2005 to $9 million in 2006, thanks to options and restricted stock grants. As of March, unrecognized stock-based compensation stands at $29 million, $11 million of which will be amortized over the rest of this year.

Such compensation is standard practice at start-ups that are competing to attract the best talent. But the $38 million in recognized and unrecognized stock-based compensation, coupled with the $53 million insiders raised in the IPO, could leave other investors feeling as though they are second-class citizens.

As long as the company keeps barreling ahead and the stock rises, they won't complain. But the big compensation may become a factor if the stock does start to go south.