Akamai (AKAM) 10-Q 9 Nov 09 2009 Q3 Quarterly report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Dec. 31, 2008
Current assets:
Cash and cash equivalents	$202,802	$156,074
Marketable securities (including restricted securities of $1,941 at September 30, 2009 and $3,460 at December 31, 2008)	379,268	174,557
Accounts receivable, net of reserves of $14,297 and $11,270 at September 30, 2009 and December 31, 2008, respectively	152,132	139,612
Prepaid expenses and other current assets	37,828	27,124
Deferred income tax assets	4,542	4,542
Total current assets	776,572	501,909
Property and equipment, net	179,826	174,483
Marketable securities (including restricted securities of $73 at September 30, 2009 and $153 at December 31, 2008)	391,206	440,996
Goodwill	441,875	441,258
Other intangible assets, net	80,415	92,995
Deferred income tax assets, net	154,246	223,718
Other assets	4,531	5,592
Total assets	2,028,671	1,880,951
Current liabilities:
Accounts payable	24,142	21,165
Accrued expenses and other current liabilities	54,871	66,132
Deferred revenue	30,423	11,506
Accrued restructuring	869	1,653
Total current liabilities	110,305	100,456
Other liabilities	17,211	10,619
Deferred revenue	2,954	1,251
1% convertible senior notes	199,755	199,855
Total liabilities	330,225	312,181
Commitments, contingencies and guarantees (Note 15)	-	-
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares designated as Series A Junior Participating Preferred Stock; no shares issued or outstanding	0	0
Common stock, $0.01 par value; 700,000,000 shares authorized; 173,903,680 shares issued and 171,222,534 shares outstanding at September 30, 2009 and 169,371,675 shares issued and outstanding at December 31, 2008	1,739	1,694
Additional paid-in capital	4,599,355	4,539,154
Accumulated other comprehensive income (loss), net	(9,527)	(24,350)
Treasury stock, at cost, 2,681,146 shares at September 30, 2009	(51,226)	0
Accumulated deficit	(2,841,895)	(2,947,728)
Total stockholders' equity	1,698,446	1,568,770
Total liabilities and stockholders' equity	$2,028,671	$1,880,951

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
In Thousands, except Share data	Sep. 30, 2009	Dec. 31, 2008
Marketable securities, restricted securities	$1,941	$3,460
Accounts receivable, reserves	14,297	11,270
Marketable securities, restricted securities	$73	$153
Preferred stock, par value	0.01	0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares designated as Series A Junior Participating Preferred Stock	700,000	700,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	0.01	0.01
Common stock, shares authorized	700,000,000	700,000,000
Common stock, shares issued	173,903,680	169,371,675
Common stock, shares outstanding	171,222,534	169,371,675
Treasury stock, shares	2,681,146	0

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Revenues	$206,500	$197,347	$621,468	$578,370
Costs and operating expenses:
Cost of revenues	61,987	56,659	182,358	161,922
Research and development	10,904	9,943	31,138	28,766
Sales and marketing	44,106	42,027	127,813	119,159
General and administrative	34,655	33,776	105,867	100,845
Amortization of other intangible assets	4,103	3,173	12,580	10,254
Restructuring charge	0	0	454	0
Total costs and operating expenses	155,755	145,578	460,210	420,946
Income from operations	50,745	51,769	161,258	157,424
Interest income	3,434	5,678	12,233	19,209
Interest expense	(710)	(684)	(2,130)	(2,104)
Other (expense) income, net	(659)	154	659	(340)
Gain (loss) on investments, net	83	1	643	273
Income before provision for income taxes	52,893	56,918	172,663	174,462
Provision for income taxes	20,148	23,558	66,830	69,857
Net income	$32,745	$33,360	$105,833	$104,605
Net income per weighted average share:
Basic	0.19	0.2	0.62	0.63
Diluted	0.18	0.18	0.57	0.56
Shares used in per share calculations:
Basic	171,686	168,474	171,588	167,283
Diluted	188,273	187,769	188,671	188,175

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Cash flows from operating activities:
Net income	$105,833	$104,605
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	89,921	70,628
Stock-based compensation expense	41,999	42,370
Provision for deferred income taxes, net	61,784	66,386
Amortization of deferred financing costs	630	630
Provision for doubtful accounts	4,261	1,346
Excess tax benefits from stock-based compensation	(1,371)	(11,033)
Gain on investments and loss on disposal of property and equipment, net	(367)	(287)
Gain on divesture of certain assets	(1,062)	0
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	3,895	(10,892)
Prepaid expenses and other current assets	(10,727)	(8,208)
Accounts payable, accrued expenses and other current liabilities	(3,437)	(1,033)
Deferred revenue	2,261	(2,333)
Accrued restructuring	(1,022)	(547)
Other non-current assets and liabilities	6,945	(611)
Net cash provided by operating activities	299,543	251,021
Cash flows from investing activities:
Purchases of property and equipment	(58,455)	(76,229)
Capitalization of internal-use software development costs	(20,448)	(18,721)
Purchases of short- and long-term marketable securities	(530,794)	(479,555)
Proceeds from sales of short- and long-term marketable securities	304,558	172,100
Proceeds from maturities of short- and long-term marketable securities	91,744	118,356
Cash paid for acquisition of business	(5,779)	0
Proceeds from divesture of certain assets	1,350	0
Proceeds from the sale of property and equipment	32	76
Decrease in restricted investments held for security deposits	233	0
Net cash used in investing activities	(217,559)	(283,973)
Cash flows from financing activities:
Proceeds from the issuance of common stock under stock option and employee stock purchase plans	13,759	19,802
Excess tax benefits from stock-based compensation	1,371	11,033
Repurchase of common stock	(51,568)	0
Net cash (used in) provided by financing activities	(36,438)	30,835
Effects of exchange rate changes on cash and cash equivalents	1,182	(939)
Net increase (decrease) in cash and cash equivalents	46,728	(3,056)
Cash and cash equivalents at beginning of period	156,074	145,078
Cash and cash equivalents at end of period	202,802	142,022
Supplemental disclosure of cash flow information:
Cash paid for income taxes	16,605	10,018
Cash paid for interest	999	999
Non-cash financing and investing activities:
Capitalization of stock-based compensation as internal-use software	4,525	5,459
Common stock issued upon conversion of 1% convertible senior notes	100	0
Common stock returned upon settlement of escrow claims related to prior business acquisitions	($213)	($2,452)

1. Nature of Business and Basis

1. Nature of Business and Basis of Presentation
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
1. Nature of Business and Basis of Presentation	1. Nature of Business and Basis of Presentation Akamai Technologies, Inc. (Akamai or the Company) provides services for accelerating and improving the delivery of content and applications over the Internet. Akamais globally distributed platform comprises thousands of servers in hundreds of networks in approximately 70 countries. The Company was incorporated in Delaware in 1998 and is headquartered in Cambridge, Massachusetts. Akamai currently operates in one industry segment: providing services for accelerating and improving delivery of content and applications over the Internet. The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information. These financial statements include the accounts of Akamai and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying financial statements. Certain information and footnote disclosures normally included in the Companys annual audited consolidated financial statements and accompanying notes have been condensed or omitted in these interim financial statements. Accordingly, the unaudited consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in Akamais annual report on Form 10-K for the year ended December31, 2008, filed with the Securities and Exchange Commission on March2, 2009. The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited consolidated financial statements include all adjustments and accruals, consisting only of normal recurring adjustments, that are necessary for a fair statement of the results of all interim periods reported herein. The Company evaluated subsequent events through November9, 2009, the date it filed its report on Form 10-Q for the quarter ended September30, 2009 with the Securities and Exchange Commission, and had no material subsequent events to report.

2. Recent Accounting Pronouncem

2. Recent Accounting Pronouncements
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
2. Recent Accounting Pronouncements	2. Recent Accounting Pronouncements In February 2008, the Financial Accounting Standards Board (the FASB) issued authoritative guidance for fair value measurement for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company adopted this guidance on January1, 2009, and it did not have a material impact on the Companys consolidated financial statements. In June 2008, the FASB issued authoritative guidance for determining whether instruments granted in share-based payment transactions are participating securities. The Company adopted this guidance on January1, 2009. This guidance provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform with the provisions in this guidance. The adoption of the guidance for determining whether instruments granted in share-based payment transactions are participating securities did not have a material impact on the Companys consolidated financial statements. In December 2007, the FASB issued authoritative guidance on accounting for business combinations. The Company adopted this guidance on January1, 2009. The standard significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, in-process research and development and restructuring costs. In addition, under the standard, changes in deferred tax asset valuation allowances and acquired income tax uncertainties in a business combination that occur after the measurement period will impact income tax expense. The standard may have a material impact on the Companys consolidated financial statements if or when it enters into any business combinations in the future. In April 2009, the FASB issued authoritative guidance for interim disclosures about fair value of financial instruments, which amended previous guidance to require disclosures about fair value of financial instruments in interim as well as in annual financial statements. This guidance also amends previous guidance for financial reporting to require those disclosures in all interim financial statements. The guidance for interim disclosures about fair value of financial instruments is effective for periods ending after June15, 2009. The adoption of the guidance did not have a material impact on the Companys consolidated financial statements. In April 2009, the FASB issued authoritative guidance clarifying how companies should determine fair value measurements when the level of market activity for an asset or liability has significantly decreased. The authoritative guidance is effective for periods ending after June15, 2009. The adop

3. Business Acquisition

3. Business Acquisition
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
3. Business Acquisition	3. Business Acquisition aCerno In November 2008, the Company acquired all of the outstanding common and preferred stock of the parent entity of aCerno, Inc. (acerno) including vested stock options, in exchange for approximately $89.5 million in cash paid in 2008 and in the first quarter of 2009. The purchase of acerno was intended to augment Akamais Internet advertising-related offerings, which are designed to help customers more effectively target online advertising to the desired audience. The aggregate purchase price of $90.8 million consisted of $89.5 million in cash and $1.3 million of transaction costs, which primarily consisted of fees for legal and financial advisory services. The acquisition of acerno was accounted for using the purchase method of accounting. The results of operations of the acquired business have been included in the consolidated financial statements of the Company since November3, 2008, the date of acquisition. The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition, as determined by management and, with respect to identifiable intangible assets, by management with the assistance of an appraisal provided by a third-party valuation firm. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed was recorded as goodwill. The value of the goodwill from this acquisition can be attributed to a number of business factors including, but not limited to, potential sales opportunities to provide Akamai services to acerno customers; a trained technical workforce in place in the United States; an existing sales pipeline and a trained sales force. In accordance with current accounting standards, goodwill associated with the acerno acquisition will not be amortized and will be tested for impairment at least annually. The following table presents the allocation of the purchase price for acerno: (Inthousands) Total consideration: Cash paid $ 89,520 Transaction costs 1,294 Total purchase consideration $ 90,814 Allocation of the purchase consideration: Current assets $ 5,249 Property and equipment 1,720 Identifiable intangible assets 19,400 Goodwill 80,901 Deferred tax liabilities (7,516 ) Other liabilities assumed (8,940 ) $ 90,814 The following were the identified intangible assets acquired and the respective estimated periods over which such assets will be amortized: Amount Weighted average usefullife (Inthousands) (Inyears) Completed technologies $ 9,200 2.5 Customer relationships 4,300 4.1 Non-compete agreements 5,600 2.5 Trade names 300 1.5 Total $ 19,400 In determining the purchase price allocation, the Company considered, among other factors, its intention to use the acquired assets and the historical and estimated future demand for acerno services. The fair value of intangible assets was based upon the inc

4. Marketable Securities and In

4. Marketable Securities and Investments
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
4. Marketable Securities and Investments	4. Marketable Securities and Investments The Company accounts for financial assets and liabilities in accordance with a fair value measurement accounting standard. The accounting standard provides a framework for measuring fair value under GAAP and requires expanded disclosures regarding fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting standard also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1Quoted prices in active markets for identical assets or liabilities. Level 2Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques. The following is a summary of marketable securities and other investment-related assets held at September30, 2009 and December31, 2008 (in thousands). As of September30, 2009 Cost Gross Unrealized Other-than- temporary Impairment Gains (Losses) Aggregate FairValue ClassifiedonBalanceSheet Short-term Marketable Securities Long-term Marketable Securities Gains Losses Available-for-sale securities: Certificates of deposit $ 405 $ $ $ $ 405 $ 382 $ 23 Commercial paper 45,456 9 (17 ) 45,448 45,448 U.S.corporate debt securities 289,010 2,855 (109 ) 291,756 172,051 119,705 U.S.government agency obligations 176,910 541 (8 ) 177,443 84,987 92,456 Auction rate securities 200,200 (21,178 ) 179,022 179,022 711,981 3,405 (21,312 ) 694,074 302,868 391,206 Trading securities: Auction rate securities 76,400 (9,761 ) 66,639 66,639 Other investment-related assets: Put option related to auction rate securities 9,761 9,761 9,761 $ 788,381 $ 3,405 $ (21,312 ) $ $ 770,474 $ 379,268 $ 391,206

5. Accounts Receivable

5. Accounts Receivable
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
5. Accounts Receivable	5. Accounts Receivable Net accounts receivable consisted of the following (in thousands): September30, 2009 December31, 2008 Trade accounts receivable $ 133,943 $ 138,286 Unbilled accounts 32,486 12,596 Gross accounts receivable 166,429 150,882 Allowance for doubtful accounts (7,768 ) (6,943 ) Reserve for cash-basis customers (6,529 ) (4,327 ) Total accounts receivable reserves (14,297 ) (11,270 ) Accounts receivable, net $ 152,132 $ 139,612 The Companys accounts receivable balance includes unbilled amounts that represent revenues recorded for customers that are typically billed monthly in arrears. The Company records reserves against its accounts receivable balance. These reserves consist of allowances for doubtful accounts and reserves for cash-basis customers. Increases and decreases in the allowance for doubtful accounts are included as a component of general and administrative expenses. The Companys reserve for cash-basis customers increases as services are provided to customers where collection is no longer assured. Increases to the reserve for cash-basis customers are recorded as reductions of revenues. The reserve decreases and revenue is recognized when and if cash payments are received. Estimates are used in determining these reserves and are based upon the Companys review of outstanding balances on a customer-specific, account-by-account basis. The allowance for doubtful accounts is based upon a review of customer receivables from prior sales with collection issues where the Company no longer believes that the customer has the ability to pay for services previously provided. The Company also performs ongoing credit evaluations of its customers. If such an evaluation indicates that payment is no longer reasonably assured for services provided, any future services provided to that customer will result in the creation of a cash-basis reserve until the Company receives consistent payments. The Company does not have any off-balance sheet credit exposure related to its customers. For presentation on the balance sheet at December31, 2008, the Company reduced customer accounts receivable balances and deferred revenue by the amount of any deferred revenue recorded for customers that had a balance receivable. The reduction as of December31, 2008 totaled $22.2 million. Beginning in the quarter ended March31, 2009, the Company ceased to record such reduction for balance sheet presentation and now only records a reduction of customers accounts receivable balances for the amount of any deferred revenue related to services that have not yet commenced and any deferred revenue for customers from which collection is not reasonably assured. The actual reported deferred revenue on the balance sheet at December31, 2008 was $12.8 million. That amount would have been $30.1 million if the new presentation had been applied at December31, 2008.

6. Accrued Expenses and Other C

6. Accrued Expenses and Other Current Liabilities
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
6. Accrued Expenses and Other Current Liabilities	6. Accrued Expenses and Other Current Liabilities Accrued expenses consisted of the following (in thousands): September30, 2009 December31, 2008 Payroll and other related benefits $ 31,520 $ 26,377 Bandwidth and co-location 17,190 16,642 Property, use and other taxes 932 13,317 Legal professional fees 1,479 1,475 Other 3,750 8,321 Total $ 54,871 $ 66,132

7. Net Income per Share

7. Net Income per Share
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
7. Net Income per Share	7. Net Income per Share Basic net income per share is computed using the weighted average number of common shares outstanding during the applicable period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable pursuant to stock options, deferred stock units, restricted stock units (RSUs) and convertible notes. The following table sets forth the components used in the computation of basic and diluted net income per common share (in thousands, except per share data): Forthe ThreeMonthsEnded September30, Forthe NineMonthsEnded September 30, 2009 2008 2009 2008 Numerator: Net income $ 32,745 $ 33,360 $ 105,833 $ 104,605 Add back of interest expense on 1% convertible senior notes, net of tax 439 416 1,305 1,277 Numerator for diluted net income $ 33,184 $ 33,776 $ 107,138 $ 105,882 Denominator: Denominator for basic net income per common share 171,686 168,474 171,588 167,283 Effect of dilutive securities: Stock options 2,589 3,730 2,724 4,971 Effect of escrow contingencies 347 458 347 458 RSUs and deferred stock units 722 2,171 1,078 2,527 Assumed conversion of 1% convertible senior notes 12,929 12,936 12,934 12,936 Denominator for diluted net income per common share 188,273 187,769 188,671 188,175 Basic net income per common share $ 0.19 $ 0.20 $ 0.62 $ 0.63 Diluted net income per common share $ 0.18 $ 0.18 $ 0.57 $ 0.56 Outstanding options to acquire an aggregate of 3.2million and 3.3million shares of common stock for the three months ending September30, 2009 and 2008, respectively, were excluded from the calculation of diluted earnings per share because the exercise prices of these stock options were greater than the average market price of the Companys common stock during the respective periods. Similarly, outstanding options to acquire an aggregate of 3.2million and 2.5million shares of common stock for the nine months ending September30, 2009 and 2008, respectively, were excluded from the calculation of diluted earnings per share because the exercise prices of these stock options were greater than the average market price of the Companys common stock during the respective periods. Additionally, 3.3million and 2.0million shares of common stock issuable in respect of outstanding performance-based RSUs were excluded from the computation of diluted net income per share for the three and nine months ended September30, 2009 and 2008, respectively, because the performance conditions had not been met as of those dates. The calculation of assumed proceeds used to determine the diluted weighted average shares outstanding under the treasury stock method in the p

8. Stockholders' Equity

8. Stockholders' Equity
	1/1/2009 - 9/30/2009 USD / shares
Notes to Financial Statements [Abstract]
8. Stockholders' Equity	8. Stockholders Equity Stock Repurchase Program On April29, 2009, the Company announced that its Board of Directors had authorized a stock repurchase program permitting purchases of up to $100.0 million of the Companys common stock from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased will be determined by the Companys management based on its evaluation of market conditions and other factors. The Company may choose to suspend or discontinue the repurchase program at any time. During the three and nine months ended September30, 2009, the Company repurchased 1,967,946 and 2,681,146 shares, respectively, of its common stock for $36.2 million and $51.2 million, respectively. As of September30, 2009, the Company had $48.8 million remaining available for future purchases of shares under the approved repurchase program. Additionally, as of September30, 2009, the Company had prepaid approximately $0.3 million for purchases of its common stock which had a settlement date in early October 2009. Stock-Based Compensation Expense The following table summarizes the components of total stock-based compensation expense included in the Companys consolidated statements of operations for the three and nine months ended September30, 2009 and 2008 (in thousands): Forthe ThreeMonthsEnded September30, Forthe NineMonthsEnded September30, 2009 2008 2009 2008 Stock-based compensation expense by type of award: Stock options $ 4,344 $ 5,609 $ 13,621 $ 17,249 Deferred stock units 2,085 1,885 RSUs 9,630 9,519 27,957 25,973 Shares issued under the Employee Stock Purchase Plan 1,011 862 2,861 2,722 Amounts capitalized as internal-use software (1,373 ) (1,868 ) (4,525 ) (5,459 ) Total stock-based compensation before income taxes 13,612 14,122 41,999 42,370 Less: Income tax benefit (5,185 ) (5,072 ) (16,257 ) (14,379 ) Total stock-based compensation, net of taxes $ 8,427 $ 9,050 $ 25,742 $ 27,991 Effect of stock-based compensation on income by line item: Cost of revenues $ 532 $ 614 $ 1,582 $ 1,779 Research and development expense 2,654 2,765 7,603 7,875 Sales and marketing expense 6,787 6,949 19,851 19,002 General and administrative expense 3,639 3,794 12,963 13,714 Provision for income taxes (5,185 ) (5,072 ) (16,257 ) (14,379 ) Total cost related to stock-based compensation, net of taxes $ 8,427 $ 9,050 $ 25,742 $ 27,991 In addition to the amounts of stock-based compensation reported in the table above, the Companys consolidated statements of operations for the three and nine months ended Septemb

9. Comprehensive Income

9. Comprehensive Income
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
9. Comprehensive Income	9. Comprehensive Income The following table presents the calculation of comprehensive income and its components (in thousands): For the Three Months Ended September30, For the Nine Months Ended September30, 2009 2008 2009 2008 Net income $ 32,745 $ 33,360 $ 105,833 $ 104,605 Other comprehensive income (loss): Foreign currency translation adjustments 1,380 (4,101 ) 2,444 (3,180 ) Change in unrealized gain (loss) on investments, net 2,600 (14,001 ) 20,208 (31,121 ) Income tax (expense) benefit related to unrealized gain (loss) on investments, net (1,007 ) 5,718 (7,829 ) 12,154 Other comprehensive income (loss) 2,973 (12,384 ) 14,823 (22,147 ) Comprehensive income $ 35,718 $ 20,976 $ 120,656 $ 82,458 Accumulated other comprehensive income (loss) consisted of (in thousands): September30, 2009 December31, 2008 Foreign currency translation adjustment $ 1,442 $ (1,002 ) Net unrealized loss on investments, net of taxes (10,969 ) (23,348 ) Total accumulated other comprehensive income (loss) $ (9,527 ) $ (24,350 )

10. Goodwill and Other Intangib

10. Goodwill and Other Intangible Assets
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
10. Goodwill and Other Intangible Assets	10. Goodwill and Other Intangible Assets The Company recorded goodwill and other intangible assets as a result of business acquisitions that occurred from 2000 through 2008. The Company also acquired license rights from the Massachusetts Institute of Technology in 1999. During the nine months ended September30, 2009, the Company made purchase accounting adjustments affecting goodwill of $0.6 million to reflect the final determination of the fair value of assumed liabilities and assets in connection with the acquisition of acerno. Other intangible assets that are subject to amortization consist of the following (in thousands): September30, 2009 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Completed technology $ 35,031 $ (9,531 ) $ 25,500 Customer relationships 88,700 (38,853 ) 49,847 Non-compete agreements 7,200 (2,489 ) 4,711 Trademarks 800 (443 ) 357 Acquired license rights 490 (490 ) Total $ 132,221 $ (51,806 ) $ 80,415 December31, 2008 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Completed technology $ 35,031 $ (5,659 ) $ 29,372 Customer relationships 88,700 (31,291 ) 57,409 Non-compete agreements 7,200 (1,529 ) 5,671 Trademarks 800 (257 ) 543 Acquired license rights 490 (490 ) Total $ 132,221 $ (39,226 ) $ 92,995 Aggregate expense related to amortization of other intangible assets for the three months ended September30, 2009 and 2008 was $4.1 million and $3.2 million, respectively. For the nine months ended September30, 2009 and 2008, aggregate expense related to amortization of other intangible assets was $12.6 million and $10.3 million, respectively. Based on the Companys other intangible assets as of September30, 2009, aggregate expense related to amortization of other intangible assets is expected to be $4.1 million for the remainder of 2009, and $16.4 million, $16.4 million, $15.4 million and $12.6 million for fiscal years 2010, 2011, 2012 and 2013, respectively.

11. Concentration of Credit Ris

11. Concentration of Credit Risk
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
11. Concentration of Credit Risk	11. Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist of cash and cash equivalents, marketable securities and accounts receivable. The Company maintains the majority of its cash, cash equivalents and marketable securities balances principally with domestic financial institutions that the Company believes are of high credit standing. At September30, 2009 and December31, 2008, the Company held ARS, with an estimated fair value of $245.7 million and $237.0 million, respectively, which have experienced failed auctions, which have prevented the Company from liquidating those investments. Based on its ability to access its cash and short-term investments and its expected cash flows, the Company does not anticipate the current lack of liquidity with respect to these ARS to have a material impact on its financial condition or results of operations during 2009. As of September30, 2009, the Company had recorded a pre-tax cumulative unrealized loss of $21.2 million related to the temporary impairment of the ARS, which was included in accumulated other comprehensive loss on its consolidated balance sheet. See Note 4. Concentrations of credit risk with respect to accounts receivable are limited to certain customers to which the Company makes substantial sales. The Companys customer base consists of a large number of geographically dispersed customers diversified across numerous industries. To reduce risk, the Company routinely assesses the financial strength of its customers. Based on such assessments, the Company believes that its accounts receivable credit risk exposure is limited. No customer accounted for 10% or more of accounts receivable as of September30, 2009 or as of December31, 2008. The Company believes that, at September30,2009, concentration of credit risk related to accounts receivable is not significant.

12. 1% Convertible Senior Notes

12. 1% Convertible Senior Notes
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
12. 1% Convertible Senior Notes	12. 1% Convertible Senior Notes As of September30, 2009, the carrying amount and fair value of the Companys 1% convertible senior notes were $199.8 million and $273.2 million, respectively. The initial, and current, conversion price of the 1% convertible senior notes is $15.45 per share (equivalent to 64.7249 shares of common stock per $1,000 principal amount of 1% convertible senior notes). During the three months ended September30, 2009, the Company issued 6,472 shares of common stock in connection with the conversion of $100,000 in aggregate principal amount of its 1% convertible senior notes. The conversion price is subject to adjustment in certain events. The Company may redeem the 1% convertible senior notes on or after December15, 2010 at the Companys option at 100% of the principal amount together with accrued and unpaid interest. Conversely, holders of the 1% convertible senior notes may require the Company to repurchase all or a portion of such notes at 100% of the principal amount plus accrued and unpaid interest on certain specified dates beginning on December15, 2010. In the event of a change of control of the Company, the holders may require Akamai to repurchase all or a portion of such 1% convertible senior notes at a repurchase price of 100% of the principal amount plus accrued and unpaid interest. Interest on the 1% convertible senior notes began to accrue as of the issue date and is payable semiannually on June15 and December15 of each year. The 1% convertible senior notes are senior unsecured obligations and are the same rank as all existing and future senior unsecured indebtedness of Akamai. The 1% convertible senior notes rank senior to all of the Companys subordinated indebtedness. Deferred financing costs of $5.9 million, including the initial purchasers discount and other offering expenses, for the 1% convertible senior notes are being amortized over the first seven years of the term of these notes to reflect the put and call rights discussed above. Amortization of deferred financing costs of the 1% convertible senior notes was $210,000 and $630,000 each for the three and nine-month periods ended September30, 2009 and 2008. Using the effective interest method, the Company records the amortization of deferred financing costs as interest expense in the consolidated statement of operations.

13. Segment and Geographic Info

13. Segment and Geographic Information
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
13. Segment and Geographic Information	13. Segment and Geographic Information Akamais chief decision-maker, as defined under the authoritative guidance that discusses disclosures about segments of an enterprise and related information, is the Chief Executive Officer and the executive management team. As of September30, 2009, Akamai operated in one industry segment: providing services for accelerating and improving the delivery of content and applications over the Internet. The Company is not organized by market and is managed and operated as one business. A single management team that reports to the Chief Executive Officer comprehensively manages the entire business. The Company does not operate any material separate lines of business or separate business entities with respect to its services. Accordingly, the Company does not accumulate discrete financial information with respect to separate product lines and does not have separately reportable segments as defined in the guidance. The Company deploys its servers into networks worldwide. As of September30, 2009, the Company had $142.2 million and $37.6 million of property and equipment, net of accumulated depreciation, located in the United States and in foreign locations, respectively. As of December31, 2008, the Company had $138.6 million and $35.9 million of property and equipment, net of accumulated depreciation, located in the United States and in foreign locations, respectively. Akamai sells its services through a direct sales force and channel partners located both in the United States and certain foreign locations. For both the three and nine months ended September30, 2009, approximately 28% of revenues were derived from the Companys operations outside the United States, including 17% from Europe. For the three and nine months ended September30, 2008, approximately 26% and 25% of revenues, respectively, was derived from the Companys operations outside the United States, including 17% and 18%, respectively, from Europe during such periods. No single country outside the United States accounted for 10% or more of revenues during these periods. For the three and nine months ended September30, 2009 and 2008, no customer accounted for 10% or more of total revenues.

14. Income Taxes

14. Income Taxes
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
14. Income Taxes	14. Income Taxes The Companys effective income tax rate, including discrete items, was 38.7% and 40.0% for the nine months ended September30, 2009 and 2008, respectively. The effective income tax rate is based upon the estimated income for the year, the estimated composition of the income in different jurisdictions and discrete adjustments, if any, in the applicable quarterly periods for settlements of tax audits or assessments, the resolution or identification of tax position uncertainties, and acquisitions of other companies. The discrete items also include the tax effect of disqualifying dispositions of incentive stock options and shares purchased under the ESPP. For the nine months ended September30, 2009 and 2008, the effective income tax rates were higher than the federal statutory tax rate mainly due to the effects of accounting for stock-based compensation in accordance with the authoritative guidance for share-based payments, and state income tax expense.

15. Commitments, Contingencies

15. Commitments, Contingencies and Guarantees
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
15. Commitments, Contingencies and Guarantees	15. Commitments, Contingencies and Guarantees Operating Lease Commitments The Company leases its facilities under non-cancelable operating leases. These operating leases expire at various dates through December 2019 and generally require the payment of real estate taxes, insurance, maintenance and operating costs. As of June1, 2009, the Company is occupying an additional 110,000 square feet at its current location in Cambridge. These lease obligations have been included in the future lease commitment table below. The expected minimum aggregate future obligations under non-cancelable leases as of September30, 2009 were as follows (in thousands): Operating Leases Remaining 2009 $ 5,333 2010 20,770 2011 20,026 2012 19,448 2013 18,374 Thereafter 90,244 Total $ 174,195 Purchase Commitments The Company has long-term commitments for bandwidth usage and co-location services with various network and Internet service providers. For the remainder of 2009 and for the years ending December31, 2010 and 2011, the minimum commitments pursuant to these contracts in effect as of September30, 2009, are $21.2 million, $24.6 million and $0.6 million, respectively. As of September30, 2009, the Company had entered into purchase orders with various vendors for aggregate purchase commitments of $22.2 million, which are expected to be paid over the next twelve months. Litigation Between July2, 2001 and November7, 2001, purported class action lawsuits seeking monetary damages were filed in the U.S. District Court for the Southern District of New York against the Company as well as against the underwriters of its October28, 1999 initial public offering of common stock. The complaints were filed allegedly on behalf of persons who purchased the Companys common stock during different time periods, all beginning on October28, 1999 and ending on various dates. The complaints are similar and allege violations of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, primarily based on the allegation that the underwriters received undisclosed compensation in connection with the Companys initial public offering. On April19, 2002, a single consolidated amended complaint was filed, reiterating in one pleading the allegations contained in the previously filed separate actions. The consolidated amended complaint defines the alleged class period as October28, 1999 through December6, 2000. A Special Litigation Committee of the Companys Board of Directors authorized management to negotiate a settlement of the pending claims substantially consistent with a Memorandum of Understanding that was negotiated among class plaintiffs, all issuer defendants and their insurers. The parties negotiated a settlement that was subject to approval by the District Court. On February 15, 2005, the Court issued an Opinion and Order preliminarily approving the settlement, provided that the defendants and plaintiffs agree to a modification narrowing the scope of the bar order set forth in the original settlement agreement. On June 25, 2007, the District Court

Document Information

Document Information
	9 Months Ended Sep. 30, 2009 USD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-30

Entity Information

Entity Information (USD $)
	9 Months Ended Sep. 30, 2009	Nov. 05, 2009
Entity [Text Block]
Trading Symbol	AKAM
Entity Registrant Name	AKAMAI TECHNOLOGIES INC
Entity Central Index Key	0001086222
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		171,279,451