This past July 28th, the news on Akamai Technologies Inc. (NASDAQ: AKAM) was dominated by its 2Q earnings release. It was another beat for the market-leader in cloud-optimization services, its 10th in the past 11 Qs. Still, the most significant news of the day from a long-term perspective was AKAM’s new C-level addition, David Kenny. AKAM announced that Kenny, 48, would be joining the company as President effective Sept. 7th and would be responsible for for leading Akamai’s business operations, including the company’s product groups; global sales, services, and marketing; engineering; and networks and operations.
Kenny has long been among the most well-respected executives in digital media. Immediately preceding his move to AKAM, Kenny held the post of Managing Partner at Viviki in addition to being a member of the Management Board of Publicis Group SA. Prior to joining Publicis, Kenny was the CEO of Digitas LLC, an integrated brand agency with over 3,000 employees. He is also a member of the board of Teach for America and an HBS MBA grad.
Upon joining AKAM, Kenny exclaimed that, “Akamai plays such an important role in the very fabric of the Internet…I have long admired the company’s talents and technological capabilities.” He added that, “[he] was honored to be asked by [CEO] Paul to help Akamai execute against its many opportunities for continued growth and innovation, and [that] it is a distinct privilege to join the Akamai team.”
AKAM Chairman of the Board George H. Conrades asserted that, “our management team has never been stronger,” adding that, “under Paul’s leadership and with the addition of David, we look forward to the results of their collaboration in achieving the significant opportunities ahead.”
On the day of July 28th, shares of AKAM were hit hard. Sentiment had reached a point where beating and raising was no longer a reason to be bullish of shares in and of itself. The selling shook out momentum investors to the tune of a 17% 3-day plunge, which turned out to be the best buying opportunity in AKAM since May.
We have long been behind Akamai here at the Cheat Sheet and continue to be of that opinion. Indeed, we recommended picking up shares at $41, or 28% ago, back on May 10th. In an age where sources of future domestic growth are becoming increasingly unknown, the cloud is one of the few unassailable growth themes. Shares of AKAM are up an impressive 43% since the initial selloff following the company’s last earnings announcement, and even greater returns likely lie ahead. While we continue to recommend AKAM here at the Cheat Sheet, those looking to open up a new long-term holding might be best off waiting for a pullback to at least the 20-day moving average to allow for optimal entry.
Disclosure: No holdings in AKAM.