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Akamai cutting 400 jobs, closing some locations

Cambridge internet company Akamai Technologies said Tuesday that it is cutting about 400 jobs and closing several small offices.

By Globe Staff 

Cambridge Internet company Akamai Technologies said Tuesday that it is cutting about 400 jobs and closing several small offices, a move that comes as it faces pressure from an activist hedge fund to boost its stock price.

The job reductions amount to about 5 percent of the company’s global workforce, though Akamai did not say where the eliminated positions were located and which locations will close.

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The company said it would consolidate smaller outposts with three to four employees out of its dozens of offices around the world. The cost reductions began in the middle of the fourth quarter last year and will continue in coming weeks, Akamai said.

Akamai has been under pressure to improve its financial performance and lift its stock price from a feared Wall Street hedge fund, Elliott Management Corp., which disclosed in December that it has control of about 6.5 percent of Akamai’s shares. On a conference call with financial analysts Tuesday, the company declined to describe its discussions with Elliott.

The stock has lagged badly over the past year and hit a low of $44.91 before recovering strongly after Elliott Management arrived on the scene. Still, it is down 8.7 percent over the past 12 months, while the Standard & Poor’s 500 recorded a 20 percent gain. It closed Tuesday at $63.67, up 1.4 percent.

Akamai is still planning to move into a new headquarters in Cambridge, where it currently has about 1,800 employees.

The company also announced its fourth-quarter earnings for 2017, beating Wall Street expectations with a stronger-than-expected revenue of $663 million — an 8 percent increase over the comparable period in 2016. But net income for the quarter was $19 million, down significantly from the prior year in part because of a charge associated with the recently passed tax reform bill.

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Akamai also said it took a $52 million charge in the fourth quarter associated with the job cuts, closures, and the “effects of decisions to deprioritize certain investment areas that have not achieved commercial success and returns on investments initially expected.”

The company said it may spend another $15 million on reductions this quarter.

Akamai said the restructuring would focus on its media division, which helps its clients transmit large files such as videos and games over the Internet. Akamai said it planned to eventually spend the savings on growth elsewhere.

Akamai was hatched out of MIT and is a leader in building out the infrastructure of the Internet. Its future has been a subject of interest in Boston’s tech scene, where it is viewed as one of the region’s most successful companies.

Elliott has said it wants to talk with management about a possible sale of the company, and Bloomberg reported last month that it was working with financial advisers to explore its options.

In the conference call, however, chief executive Tom Leighton said he would not talk about individual investors.

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“We welcome the views of all our shareholders in how we can better create value for the shareholder base as a whole, and we’ve got an active dialogue with many of our shareholders to make sure that their perspectives are heard in the boardroom,” he said.


Andy Rosen can be reached at andrew.rosen@globe.com.