Canaccord Genuity on Telecommunications: Netflix (NFLX) Launches CDN - Negative to Akamai (AKAM) and Level 3 (LVLT)
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Rating Summary:
15 Buy, 18 Hold, 10 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 15 | New: 13
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Canaccord Genuity on Telecommunications: Netflix (Nasdaq: NFLX) launches CDN - Negative to Akamai (Nasdaq: AKAM) and Level 3 (Nasdaq: LVLT)
Analyst, Greg Miller, said, "Netflix announced last night that it intends to launch its own version of a content delivery network (CDN) called OpenConnect...Although Netflix’s own CDN is unlikely to replace commercial CDN providers immediately, we believe this announcement will likely impact the share price of Akamai (Nasdaq: AKAM)(HOLD) and Level 3 (Nasdaq: LVLT)(HOLD), both primary CDN service suppliers to Netflix."
"Although it remains unclear just how much incentive ISPs, who also aggregate and deliver competing video services, will have to adopt the new Netflix proposal to relieve traffic stresses on respective networks, it is fairly clear that Netflix intends to do everything in its power to lower overall network costs that it currently pays providers such as Level 3 Communications and Akamai Technologies. It is highly likely that Netflix has already deployed some of the equipment needed to begin offering the services. With this announcement, Netflix has essentially followed the footsteps of YouTube, which has long had its own content delivery network. Although Netflix will likely have to invest significantly in order to support the exponential online video growth, as its CDN suppliers would otherwise have to, given its size, we believe it could potentially make economic sense for Netflix (Nasdaq: NFLX)(Sell)."
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Analyst, Greg Miller, said, "Netflix announced last night that it intends to launch its own version of a content delivery network (CDN) called OpenConnect...Although Netflix’s own CDN is unlikely to replace commercial CDN providers immediately, we believe this announcement will likely impact the share price of Akamai (Nasdaq: AKAM)(HOLD) and Level 3 (Nasdaq: LVLT)(HOLD), both primary CDN service suppliers to Netflix."
"Although it remains unclear just how much incentive ISPs, who also aggregate and deliver competing video services, will have to adopt the new Netflix proposal to relieve traffic stresses on respective networks, it is fairly clear that Netflix intends to do everything in its power to lower overall network costs that it currently pays providers such as Level 3 Communications and Akamai Technologies. It is highly likely that Netflix has already deployed some of the equipment needed to begin offering the services. With this announcement, Netflix has essentially followed the footsteps of YouTube, which has long had its own content delivery network. Although Netflix will likely have to invest significantly in order to support the exponential online video growth, as its CDN suppliers would otherwise have to, given its size, we believe it could potentially make economic sense for Netflix (Nasdaq: NFLX)(Sell)."
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