Akamai Technologies has become the latest tech stock to skid after the Cambridge-based internet company warned that war in Ukraine, rising inflation and slowing internet usage would hurt its sales this year.
Akamai shares were down as much as 14% on Wednesday morning, trading at $97.65. The company joins a host of other tech players in the region who have seen their stock prices plummet amid tough economic conditions.
“It is remarkable how quickly the world has changed with the war in Ukraine, the significant strengthening of the US dollar, escalating inflation, growing concerns about a recession and moderating internet traffic growth as that many countries are removing mask mandates,” Chief Executive Tom said. Leighton said on a call with analysts.
Due to the challenges, the cybersecurity and internet services company said it expects to generate revenue of $3.62 billion to $3.67 billion for the year, a gain of 5% to 6% from to 2021. The forecast was down from a forecast of $3.673 billion to $3.728 billion (up 6% to 8%) announced by the company in February.
The reduced forecast still included about $100 million earned from the acquisition of Linode, a Philadelphia-based internet hosting service, which was completed in March.
Akamai’s first-quarter results also came in slightly below Wall Street analysts’ expectations. Revenue of $904 million, a 7% gain over the same period last year, was approximately $1 million below the average estimate and adjusted earnings per share of $1 $.39 was 3 cents short.
Still, Leighton’s strategy to offset a long-term decline in Akamai’s core business of distributing content online with growth in cybersecurity, cloud computing and new acquisitions remains on track.
The company’s security revenue rose 23% to $382 million in the first quarter, IT revenue rose 32% to $78 million, and content distribution revenue fell 6% to $444 million.