(Adds details, analysts’ comments )
April 27 (Reuters) - Shares of Limelight Networks Inc (LLNW.O), which helps speed delivery of Web content, soared as much as 27 percent after a U.S. court ruled in its favor in a long-running patents litigation with rival Akamai Technologies Inc (AKAM.O).
Limelight shares touched a year-high of $4.98 before losing some gains to trade up 95 cents at $4.86 on Nasdaq.
In a statement last night, the company said the court ruled that company did not infringe a patent held by Akamai.
Limelight added that the ruling would allow it to reverse expenses of about $66 million accrued for potential damages and interest.
The latest ruling prompted at least two brokerages to raise their ratings on the stock.
“Akamai intends to appeal the decision, and we expect the appeal process to drag on through 2010,” Friedman Billings Ramsey & Co analyst David Hilal said in a note to clients.
Wedbush Morgan Securities analyst Kerry Rice said, “While Akamai will appeal the reversal, we believe Limelight is likely to be an acquisition target.”
Friedman’s David Hilal said the ruling largely eliminates investor and customer concerns regarding the possibility of the judge issuing a permanent injunction against Limelight.
Takeout speculation surrounding the company could pick up following the ruling, he said.
“An acquisition by a large content provider or a telecommunications company makes the most sense,” the analyst added.
Both Rice and Hilal raised their ratings on the company’s stock to “buy” and “outperform”, respectively. The analysts also increased their price targets on the company by $2 to $6.
Earlier this year, Limelight won a similar patent litigation against Level 3 Communications Inc LVLT.O.
In February 2007, a U.S. District Court jury in Boston had awarded Akamai $45.5 million after determining that Limelight’s services infringed upon Akamai’s intellectual property.
Content providers and media companies, such as Netflix Inc (NFLX.O), ABC.com, Fox Interactive Media and MTV.com, use Limelight’s services to provide content over the internet such as video, music, games and software. (Reporting by Deepti Govind in Bangalore, Editing by Saumyadeb Chakrabarty)