Akamai Technologies became the latest tech stock to hit the skids after the Cambridge-based Internet company warned that the war in Ukraine, higher inflation, and slowing Internet usage would hurt its sales this year.
Shares of Akamai lost as much as 14 percent on Wednesday morning, trading as low as $97.65. The company joins a host of other area tech players that have seen their stock prices fall amid difficult economic conditions.
“It’s remarkable how quickly the world has changed with the war in Ukraine, the significant strengthening of the US dollar, escalating inflation, increasing concerns about a recession, and a moderation of Internet traffic growth as many countries remove mask mandates,” chief executive Tom Leighton said on a call with analysts.
As a result of the challenges, the cybersecurity and Internet services company said it expects to bring in $3.62 billion to $3.67 billion in revenue for the year, representing a gain of 5 percent to 6 percent over 2021. The guidance was down from a forecast of $3.673 billion to $3.728 billion (up 6 percent to 8 percent) that the company announced in February.
The reduced forecast still included about $100 million gained through the acquisition of Linode, a Philadelphia-based Internet hosting service, which was completed in March.
Akamai’s results for the first quarter also came in slightly below what Wall Street analysts expected. Revenue of $904 million, a 7 percent gain from the same period last year, was about $1 million below the average estimate and adjusted earnings per share of $1.39 missed by 3 cents.
Still, Leighton’s strategy to offset a long-term decline in Akamai’s core business of distributing online content with growth from cybersecurity, cloud computing, and new acquisitions remains on track.
The company’s security revenue rose 23 percent to $382 million in the first quarter, computing revenue gained 32 percent to 78 million, and content distribution revenue declined by 6 percent to $444 million.
Aaron Pressman can be reached at email@example.com. Follow him on Twitter @ampressman.