After conducting an eight-month search for a new chief executive, the board of Akamai Technologies Inc. found the right candidate in a familiar face just down the the hall at company headquarters.
Tom Leighton, cofounder and chief scientist of the Cambridge Internet company, will replace retiring chief executive Paul Sagan, effective Jan. 1. Sagan will remain on Akamai’s board and serve as a senior adviser to the company.
“This is a transition that will be pretty seamless,” said Leighton, a professor of applied mathematics at the Massachusetts Institute of Technology who has played a major role in developing many of Akamai’s core products. “I’ve worked very closely with Paul in the last eight years. I spend almost half my time in the field, with customers. . . . I don’t think you should expect to see any dramatic deviations.”
Leighton will take a leave of absence from MIT, and may decide to retire altogether. This fall, he taught a course at the school, on top of his Akamai duties.
Sagan became president of Akamai in 1999 and chief executive in 2005, when the company took in $283 million in revenue; last year revenues were $1.2 billion. The company has a market capitalization of $7 billion, and its shares are up 22 percent so far this year.
“It’s time for someone fresh in this chair,” Sagan said. “I really thought it would help to have a fresh set of eyes behind some of these decisions.”
Already, Leighton has made a couple of personnel shifts. Executive vice president Robert Hughes will become president of worldwide operations, while another executive vice president, Rick McConnell, becomes president of products and development. Sagan said that these changes are relatively modest expansions of the two executives’ current responsibilities.
Shares of Akamai stock rose about 1 percent in Monday trading, suggesting that investors are comfortable with Leighton in charge. They ought to be, according to Richard Fetyko, who tracks Akamai as managing director at Janney Capital Markets in New York.
“I think investors will be pleased with the transition,“ Fetyko said. “It is a bit of a surprise, because I think everyone expected an external CEO. But it’s a positive surprise, because this is going to be the least disruptive choice.”
Akamai is the leading provider of Internet content delivery services, which enable large companies to rapidly deliver vast amounts of digital data without overloading their own computers and networks. Instead, hundreds of companies and government agencies hire Akamai, which moves the data over its own worldwide server network. Akamai estimates that its network handles up to 30 percent of all data moving on the Internet.
The mathematical formulas that make the Akamai system work were developed at MIT by Leighton and graduate student Danny Lewin, who cofounded the company in 1996. Lewin was among those killed in the terrorist attacks of Sept. 11, 2001.
Revenues in Akamai’s content delivery business have been under pressure in recent years, as a host of companies have launched competing products. But one of those rivals, AT&T Inc., struck up an alliance with Akamai earlier this month. AT&T will abandon its own content delivery business and instead sell Akamai’s services to its customers. Last month, Akamai made a similar bargain with French Telecom-Orange, one of Europe’s biggest telecom companies.
“This is really transformational in our business,” Leighton said of the AT&T and Orange deals, because they will make Akamai’s technology an integral part of these global data networks.
Meanwhile, Akamai has targeted promising new markets. The company has begun offering a suite of network security products to protect large companies from attacks by digital vandals and criminals.
“It’s growing like mad,” said Leighton. “It’s the fastest growing product in the portfolio.”
In addition, Akamai offers products to speed up the performance of cloud-based Internet services, such as online retail businesses.
“In that corner of the business, there’s very little competition,” said Fetyko, who estimates that Akamai’s cloud-based services now account for 58 percent of the company’s revenue and 75 percent of its operating income.
Sagan said Akamai has room to grow as users around the world demand what he called “the instant Internet” — the ability to access vast amounts of data immediately via computers, tablets, phones, and other gadgets.