Limelight Networks has had somewhat of a rough time this past year, beginning with a patent infringement case it lost to Akamai to the tune of $46 million on March 3, 2008. Its stock price dropped 25 percent that day and has yet to recover, but Chief Strategy Officer Mike Gordon said the CDN is much better positioned than people tend to admit.

"First, everyone always mentions the Akamai case as a reason to think Limelight isn't performing well or can't get profitable," Gordon said. "But we've put aside the money to fund the damages except for interest, and we won't need to save any more for the damages after Nov.1. You can expect to see total money spent on litigation and other legal costs decrease significantly."

Limelight said in an earnings call that it reduced revenue from the allegedly infringing patent to 11 percent of total revenue for the third quarter. The company also maintains it never infringed on Akamai's patent. A company spokesman added that, as of Nov. 1, Limelight will no longer need to accrue for potential damages. He also stated the company belives the litigation filed by Akamai is without merit, and that it will continue to "vigorously defend itself in these matters."

Gordon said the company is optimistic about its status entering 2009, as it continues to see its revenue per customer grow and its many partnerships flourish. As an example, he mentioned Netflix's recent announcements that it would stream videos directly to a variety of devices in the living room, such as Xbox 360s and BluRay players, as a major positive for Limelight. Limelight has an existing relationship with Microsoft, and will handle the incoming streaming to its gaming console, adding to a trend of Limelight increasing revenue per customer into 2009.

Limelight has operated at a loss for many quarters in a row, but if the litigation expenses from the Akamai case and the damages award prove to be the biggest factors behind that, as Gordon posits, Limelight could be in better shape than first meets the eye. Gordon points to the increased of revenue per customer from $94,000 to $102,000, and a 9 percent sequential increase in profit in the third quarter as indicators of growth to come.

"We'll also increase our margins through managing costs and updating infrastructure to become more efficient," Gordon said. "Customers will continue to choose Limelight because of our scale, performance and partner ecosystem." 

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