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JAT Capital Lowers Stake in Akamai Technologies

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JAT Capital and Akamai Technologies

In the fourth quarter of 2014, JAT Capital reduced its exposure to Akamai Technologies (AKAM) through the sale of roughly 1.1 million shares, bringing the fund’s total shares in the company to 526,520. AKAM accounted for 1.27% of JAT Capital’s portfolio at the end of 4Q14.

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Company profile

Headquartered in Cambridge, Massachusetts, AKAM provides cloud-based technology that helps businesses to deliver security solutions, streaming video, online web content, and tools that support cloud-based applications. The company generates revenues of close to $2 billion.

Akamai boasts more than 170,000 servers in over 100 countries. This enables the company to manage web traffic effectively and address the requirements of diverse end users. AKAM’s customers include Apple (AAPL), Home Depot (HD), Ralph Lauren (RL), FedEx (FDX), the US federal government, and many other entities from diverse sectors.

AKAM operates through three segments:

  1. Media Delivery
  2. Performance & Security
  3. Services & Support

Media Delivery, Performance & Security, and Services & Support generate 47%, 46%, and 7% of revenues, respectively.

Acquisition of Xerocole

In March 2015, AKAM acquired Xerocole, a private entity that provides Domain Name System (or DNS) products that improve the speed, security, and flexibility to set DNS policy and preferences for carriers. AKAM believes that this acquisition will help it address customer requirements for DNS products better.

The Xerocole purchase is one of two acquisitions made by Akamai in the last 13 months. AKAM bought Prolexic Technologies, a cloud-based security solutions provider, in February 2014.

4Q14 revenue growth

AKAM witnessed revenue growth of 23% in 4Q14 from the previous-year quarter’s revenues of $536 million. Solid demand for all its products—especially its media and security offerings—led this increase. The robust top line growth translated into higher earnings as net income rose to $97 million compared to $80 million in 4Q13.

Akamai makes up 0.35% of the Technology Select Sector SPDR Fund (XLK). The company is also a component of the iShares US Technology ETF (IYW), accounting for 0.31% of the fund’s portfolio value.

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