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Why It Is a Good Idea to Stay Away From Limelight Networks
Posted by: sandyinvestment (IP Logged)
Date: July 22, 2014 10:52AM
After Akamai Technologies (AKAM) released solid results, it was the turn of individual cloud services supplier Limelight Networks (LLNW) to join the spotlight. Be that as it may, Limelight's results were no place close to Akamai's as the substance conveyance service supplier's revenue fell year over year.
Limelight turned in a feeble performance as a result of customer churns and high customer acquisition costs. Nonetheless, the organization has been in turnaround mode throughout the previous one year, and it could convey a smaller than anticipated loss in the quarter. Likewise, Limelight's loss declined slightly to $5.1 million from last year's $5.6 million.
Limelight has been harmed by customer churns as stated previously. So, the organization is chipping away at various strategies to make a rebound and address the various issues that it faces.
Gunning for a turnaround
Limelight is aggressively searching for improvements. It is extending its item suite so as to increase more customers. Likewise, Limelight is hoping to increase footing across all its solution offerings by offering an additionally propelling item suite. Limelight has increased its focus on item administration and software improvement in an exertion to solidify its solutions, so the organization should see better times later on as a result.
To address the issue of customer churns, Limelight is focusing operational efficiencies. It has made some change on this front as it could decrease one-third of the churns in the second a large portion of last year. Further, Limelight is working after enhancing work environment with a specific end goal to decrease representative turnover. Indeed this has prompted positive results as Limelight could cut down worker turnover from 20% in the first a large portion of the previous year to single digits in the final quarter.
Limelight is also focusing on enhancing benefit by moving some of its advancement capacities to lower cost geographies. Further, to enhance customer satisfaction, the organization is conveying another customer service stage to bind together ticketing, mechanized communications, fabricate an enterprise learning base, and drive proficiency.
In 2014, Limelight is focused on enhancing cost efficiencies and conveying new software, features, and usefulness. Limelight will present features such as improving adjusted configuration streaming for cell phones, redesigned computerized rights administration, and instant cleanse capabilities universally to give better services to customers. Further, it is moving to a robotized environment to evacuate inefficiencies in the business model.
In any case, Limelight will confront weakness in the business as its largest customer, Netflix (NFLX), is going to move far from its stage amidst the year. Limelight had invested intensely to fabricate its system so as to support Netflix, however last year, the online media streaming monster advertised that it is building Open Connect, its own particular substance conveyance system. Netflix was conveying just 5% of its substance from Open Connect last year, yet as it continues the transition to its own particular stage, Limelight will feel the squeeze.
Notwithstanding, Limelight expects natural and new customer development to offset the decline at Netflix and lead to revenue development this fiscal year. This indistinguishable to what peer Akamai said when it released earnings in February.
Apple is Akamai's biggest customer, and there are reports that Apple will also be building its own particular substance conveyance system. Nonetheless, Akamai believes that it is in a decent position to climate such a storm since it has an expansive customer base. Akamai counts heading carriers such as At&t, Orange, Swisscom, Korea Telecom, and Türk Telekom on its customer list and as of late entered into a concurrence with Qualcomm to give 4k videos to customers.
On the once more of this diversification, Akamai believes that it can withstand the effects of an Apple loss.
Limelight is having an intense time as of now. The organization is attempting to turn around its business and has made some progress. On the other hand, the loss of Netflix will be a worry and could weigh on the results. So, in times of such instability, I think it will be better to attend to the sidelines and see the amount impact Netflix's loss has on the organization. There's most likely Limelight's different moves are interesting, however investors can improve purpose of section in the event that they hold up.
Stocks Discussed: AKAM, LLNW, NFLX,