CAMBRIDGE, Mass., March 8, 2018 /PRNewswire/ -- Akamai
Technologies, Inc. (NASDAQ: AKAM), the world's largest and most
trusted cloud delivery platform, today announced value creation
initiatives to drive operating improvement, while continuing the
Company's focus on operational excellence and growth. Akamai has
worked collaboratively with Elliott Management on these
initiatives, which include the addition of two independent
directors, Tom Killalea and a second
director to be named at a later date, to the Board of
Directors.
As part of these initiatives, the Board will be forming a
Financial Operating Committee. The Committee will be tasked with
reviewing the Company's operations with the goal of identifying
efficiencies to enable Akamai to increase margins while continuing
its focus on growth. A nationally-recognized consulting firm is
being retained to work with the Committee. The Company said that it
had been targeting operating margins* for its existing operations
in the high 20s for 2020, and the Committee will work with
management and the consultants to identify a path to achieving
operating margins of 30% in 2020.
Frederic Salerno, Akamai's Lead
Independent Director, said, "The Akamai Board is excited about
today's announcements. In particular, we are very pleased to
welcome Tom Killalea to our
Board. He brings valuable security experience, as well as a
new perspective, and will complement the diverse skillsets and
backgrounds of our current Board members."
Dr. Tom Leighton, Akamai's Chief
Executive Officer, said, "We are pleased to announce these
initiatives and are committed to continuing our focus on
innovation, efficiency of operations, and investing for growth.
With our leadership in online delivery, performance and security,
we believe Akamai is well positioned to build on our strong
momentum in security and capitalize on the significant market
opportunities we see ahead."
Jim Benson, Akamai's Chief
Financial Officer, added, "We look forward to working with the
Financial Operating Committee and outside consulting firm to
continue to improve efficiency. Through this exercise, we are
confident that we will maintain our commitment to investing for
revenue growth by focusing on our highest-potential
opportunities."
The Company also announced that its Board has increased its
share repurchase authorization by approximately $417 million, raising the amount that is
authorized and available to $750
million, which the Company plans to fully utilize by the end
of this year. The Company also intends to continue to return to
shareholders a substantial percentage of free cash flow in future
years.
Jesse Cohn, Partner at Elliott
Management, said, "Akamai is an outstanding company with
significant potential for future growth, and we are pleased to have
worked together with the Board and management team on today's
announcements. Tom, Jim and the rest of the Akamai team are
committed to these initiatives and we are confident that the Board,
including the addition of two new independent directors, will
oversee their successful execution. We look forward to continuing
to work closely with the Board and management team to create
further value for all Akamai shareholders."
The Company plans to hold its Investor Summit around mid-year
and expects to provide an update on progress on its operating
initiatives at that time.
Pursuant to the cooperation agreement with Elliott, Elliott has
agreed to certain customary standstill provisions, including voting
in favor of the Company's proposed slate of directors at Akamai's
2018 Annual Meeting this Spring. The full cooperation agreement
with Elliott will be filed by Akamai on a Current Report on Form
8-K with the Securities and Exchange Commission.
About Tom Killalea
Tom Killalea is a seasoned
technology executive who brings deep expertise with a proven focus
on security, digital innovation, and customer experience. He
previously served as Amazon's first Chief Information Security
Officer, and in his 16 years there held various leadership roles
including Vice President of Technology for the Kindle Content
Ecosystem, and leading the company's Infrastructure and Distributed
Systems team, that worked on what later became a key part of the
AWS platform. Tom also brings extensive corporate governance
experience serving on several public company boards, including
Capital One, and MongoDB, a public database software company.
About Akamai
As the world's largest and most trusted cloud delivery platform,
Akamai makes it easier for its customers to provide the best and
most secure digital experiences on any device, anytime, anywhere.
Akamai's massively distributed platform is unparalleled in scale
with over 200,000 servers across 130 countries, giving customers
superior performance and threat protection. Akamai's portfolio of
web and mobile performance, cloud security, enterprise access, and
video delivery solutions are supported by exceptional customer
service and 24/7 monitoring. To learn why the top financial
institutions, e-commerce leaders, media & entertainment
providers, and government organizations trust Akamai please visit
http://www.akamai.com, http://blogs.akamai.com, or @Akamai on
Twitter.
Contacts:
Jeff Young
Media Relations
617-444-3913
jyoung@akamai.com
or
Tom Barth
Investor Relations
617-274-7130
tbarth@akamai.com
*Operating Margin, as used in this release, is a forward-looking
financial measure not prepared in accordance with generally
accepted accounting principles in the U.S ("GAAP"). Non-GAAP
operating margin is defined as GAAP income from operations adjusted
for the following items: amortization of acquired intangible
assets; stock-based compensation; amortization of capitalized
stock-based compensation; amortization of capitalized interest
expense; acquisition-related costs; restructuring charges; gains
and other activity related to divestiture of a business; gains and
losses on legal settlements; costs incurred with respect to
Akamai's internal FCPA investigation; and other non-recurring or
unusual items that may arise from time to time, stated as a
percentage of revenue.
This forward-looking measure cannot be reconciled to the closest
GAAP measure without unreasonable effort because of the
unpredictability of the amounts and timing of events affecting the
items we exclude therefrom. For example, stock-based compensation
is unpredictable for Akamai's performance-based awards, which can
fluctuate significantly based on current expectations of future
achievement of performance-based targets. Amortization of
intangible assets, acquisition-related costs and restructuring
costs are all impacted by the timing and size of potential future
actions, which are difficult to predict. In addition, from time to
time, Akamai excludes certain items that occur infrequently, which
are also inherently difficult to predict and estimate. It is also
difficult to predict the tax effect of the items we exclude and to
estimate certain discrete tax items, like the resolution of tax
audits or changes to tax laws. As such, the costs that are being
excluded from non-GAAP guidance are difficult to predict and a
reconciliation or a range of results could lead to disclosure that
would be imprecise or potentially misleading. Material changes to
any one of the exclusions could have a significant effect on our
guidance and future GAAP results.
Akamai Statement Under the Private Securities Litigation
Reform Act
This press release contains information about future
expectations, plans and prospects of Akamai's management that
constitute forward-looking statements for purposes of the safe
harbor provisions under The Private Securities Litigation Reform
Act of 1995, including statements about planned expenditures and
expected margin improvement. Actual results may differ materially
from those indicated by these forward-looking statements as a
result of various important factors including, but not limited to,
inability to generate expected cash flow; failure of our
investments in innovation to generate solutions that are accepted
in the market; inability to increase our revenue and manage our
expenses as planned; delay in developing or failure to develop new
service offerings or functionalities, and if developed, lack of
market acceptance of such service offerings and functionalities or
failure of such solutions to operate as expected, acquisitions or
strategic transactions and other factors that are discussed in the
Company's Annual Report on Form 10-K, quarterly reports on Form
10-Q, and other documents periodically filed with the U.S.
Securities and Exchange Commission.
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SOURCE Akamai Technologies, Inc.