Akamai Technologies Inc.'s security business enjoyed a jolt of new business from besieged websites last year, even as its big Silicon Valley customers spent less money on its network.

The shift came as Akamai unveiled Tuesday a reorganization that will divide its operations into two distinct business lines: one focused on Web security and other services, and another division focused on media delivery. As part of the changes, Akamai said longtime executive Robert Hughes would retire as president of world-wide operations.

The Cambridge, Mass., company also launched a $1 billion stock buyback plan to defray the costs of compensating workers. The company had more than 6,000 employees at the end of 2015. Chief Executive Tom Leighton said the company would slow the pace of new hiring but didn't plan any layoffs.

In the fourth quarter, earnings fell to $88.4 million from $97.1 million a year earlier as the company's stock-based compensation costs rose. Revenue climbed 8% to $579.2 million.

Shares of the company, down by a quarter so far this year, gained 16% after hours to $45.90.

Akamai estimates between 15% and 30% of all Web traffic passes through its network of more than 210,000 servers around the world. The machines are a key part of the infrastructure needed to build online video services into viable competitors for satellite and cable providers.

Video and software offered through Apple Inc., Facebook Inc. and Microsoft Corp. have fueled much of the company's past profits, though more of that traffic is flowing through big tech companies' self-built systems, an effort to save on costs.

The company last year warned that its top media customers might spend less on its services as they invested in their own networks. Executives said that would continue in 2016, with two customers worth about 13% of revenue in the past expected to shrink to about 6% this year.

"There is significant opportunity for growth outside of those two accounts," Chief Financial Officer Jim Benson said.

As part of the reorganization, Akamai said President Rick McConnell would become general manager of the realigned Web division and Bill Wheaton would continue as general manager of the media division.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Maria Armental at maria.armental@wsj.com

 

(END) Dow Jones Newswires

February 09, 2016 20:05 ET (01:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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