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techjunk13
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Can Limelight Networks Bounce Back After Poor Results?

September 30, 2014 | About:

Limelight Networks (NASDAQ:LLNW) released lackluster results for the second quarter. Limelight’s revenue fell marginally compared to last year. However, it is undertaking many strategies to improve profitability. It is also bringing in new products to diversify its business. Let us have a look at Limelight’s strategies and moves.

A closer look at the results

In the recently reported second quarter, Limelight reported revenue of $41.3 million, which is marginally less than the $42.8 million reported in the same quarter last year. On a non-GAAP basis, Limelight posted net loss of $3.6 million. It lost $0.04 per basic share for the quarter as compared to $0.07 per basic share in the second quarter of 2013.

Limelight is having a topsy-turvy ride so far this year. The revenue and earnings are declining. The stock is not performing well on the exchange. The management should take some serious steps to overcome this declining momentum. Limelight is focusing on account management in order to drive more share gains in the future. It is now aggressive about its improvement. It is focusing on its efforts to improve its operational performance and improve functionality of its core products. This will also help Limelight to reduce customer churns and employee turnover.

In the midst of the black clouds, Limelight is also seeing some bright spots that can be a growth driver for the company in the future. The company is confident as it is seeing good improvement in customer satisfaction. Limelight is also making investments in improving its processes and infrastructure.

The way ahead

Moving ahead, Limelight is making efforts to add new customers. It also has several strategies to keep its existing customers. Before making a concrete move regarding this, Limelight has recently finished its third global survey of its customer base. The outcome of the survey was fruitful, and Limelight is pleased with the progress that it saw post-survey. Limelight is relaxed with the results and has seen impressive improvement in the customer churns. The company is expecting steady improvement in the top line due to these moves.

It seems that Limelight’s strong focus on customer service is paying off, as the company is seeing good increase in the customers using CDN service on a sequential basis. On the other hand, Limelight’s win rate is also improving. The company is now pleased to see higher contract value for its wins as compared to last year. These are some bright signs that can be a good growth driver for Limelight in the coming days.

Moreover, the company is having a good image in the market. It has been recently named as a CareerBuilder Top Company to work for in Arizona. This is awarded only to those organizations that create quality jobs and work environment. This makes it clear that Limelight is having a fair image in the market which is an important thing, as it will lead to less employee turnover.

Limelight is also strengthening its product portfolio with new products. It has recently announced new content delivery solutions for Media and Broadcasters. Limelight’s new integrated workflow solution strengthens broadcasters and media content owners to deliver broadcast-quality video to online audiences faster and easier.

Conclusion

Limelight is still incurring losses, so it does not have a trailing P/E or forward P/E. But the content delivery company is making impressive moves to gain profitability, and by looking at its future five-year growth rate, its earnings are growing well with a CAGR of 12% which strengthens its long-term prospects. So as of now, the investors should stay away from the company, while the investors seeking long-term gains can definitely include Limelight in their portfolio.


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