Content delivery network and advanced services firm Akamai Technologies Inc. (AKAM) today announced a restructuring action in the fourth quarter to reduce certain operating costs. It will result in the layoff of approximately 110 workers.
The company said it expects to use “the savings generated by this action and its continuing cash from operations to support investments in key growth opportunities for content delivery, application acceleration, and its advertising industry solutions, as well as for further international expansion.”
"We have not changed our business outlook," said JD Sherman, CFO of Akamai, in prepared comments. "However, we want to ensure that we can keep investing for growth even in the current economic climate."
It appears the Akamai actions are pre-emptive. It’s not clear, however, if the restructuring of a company that’s both a pioneer of an industry segment and a bellwether for it, is a harbinger of things to come for the CDN industry.
As a result of these cost-cutting measures, Akamai said it expects to take a restructuring charge of approximately $4 million this quarter for severance and related expenses. These costs are anticipated to be partially offset by a net reduction in non-cash stock-based compensation of $0.8 million.
The layoffs represent 7 percent of Akamai’s worldwide employee population. Additionally, the company said, it expects to recognize a loss on sublease income of approximately $2.5 million related to certain leased facilities.
