BANGALORE, Feb 4 (Reuters) - Jefferies & Co Inc downgraded Limelight Networks Inc (LLNW.O) on concerns of fierce competition and a difficult pricing environment, and shares of the content delivery network services provider fell more than 11 percent.
Analyst Katherine Egbert, who downgraded the stock to “underperform” from “hold,” said an acquisition of the company looks unlikely until a patent litigation with rival Akamai Technologies Inc (AKAM.O) is resolved.
“The uncertain outcome of the Feb. 11 trial with Akamai makes Limelight a less attractive near-term target, and a deal with Microsoft now seems remote,” Egbert wrote in a note to clients.
Limelight looks more susceptible to price pressure as it has only 50 percent of revenue already booked going into any given quarter, compared with Akamai, which has about 75 percent of revenue booked, Egbert said in an e-mail to Reuters.
The analyst said pending contracts with Amazon.com Inc (AMZN.O) and DirecTV, along with the Hollywood writer’s strike and steep expectations could lead the company to guide first-quarter revenue below Wall Street estimate.
Shares of the company, which competes with larger rivals such as Akamai and Level 3 Communications Inc LVLT.O, were down 76 cents at $5.90 in afternoon trade. The stock was among the top losers on the Nasdaq. (Reporting by Bijoy Koyitty in Bangalore; Editing by Deepak Kannan)