Latest Update On Akamai/Limelight Patent Suit and Potential Limelight Sale

I have been getting a lot of requests for an update on the Akamai and Limelight patent suit, so here are the latest details I have. Last week, April 17th, Akamai filed a motion for permanent injunction against Limelight Networks. It’s expected that a ruling on the injunction will come in the next few weeks and there is a pretty good chance that the motion will be granted. If that happens, Limelight is expected to file for and be granted a stay of that motion. Once that happens, it basically means that this suit will go on for at least another year, if not more, unless both parties come to an agreement, which I don’t see happening.

While none of this is really news as this outcome has been expected since the jury ruling, I think that once all of the motions relating to the injunction are done, the two companies most interested in purchasing Limelight, AT&T and BT, could once again resume negotiations. In my eyes, it is just a matter of when Limelight will be acquired by a telco and not if. Shortly after the jury ruling, Limelight was offered a buyout for about $8 a share by a telco, which is a pretty good offering in my eyes. (I don’t own any shares in Limelight or any other public company) Even at that price, Goldman, which owns just over 35 million shares last I checked, would still walk away with well over $100 million.

Limelight needs the resources of a larger company to really take their business to the next level and to accelerate revenue growth. They can still grow and maintain business as a stand alone company, but the resources of a larger company would give them a better shot in the market for the long run. Limelight is facing at least three patent suits by Akamai, Level 3 and Two-Way Media (more on Two-way later in the week) and at this rate, the lawsuits will take their toll on the company in terms of resources and focus, in addition to cash.

I hope for their sake and for the industry that Goldman isn’t going to be too greedy and a deal can be worked out sooner rather than later. There is a huge gap between Akamai, Limelight and the number three CDN in the market in terms of revenue, and I think it’s best for the industry to have as many top players as possible.