Limelight Files for $201M IPO

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Limelight Networks, a content-distribution network that provides Internet video-delivery services, filed for an initial public offering that it said could be worth up to $201 million.

Limelight said its two biggest video-distribution customers are MSNBC and Viacom. All told, it said it has more than 700 customers, although in 2006, revenue generated by sales to its top 10 customers accounted for 58% of total revenue, according to Limelight’s March 22 S-1 filing.

Its chief competitor is publicly traded Akamai Technologies, which, along with the Massachusetts Institute of Technology, filed a federal patent-infringement suit against Limelight in June 2006.

The suit alleged that Limelight infringed three patents assigned to MIT and exclusively licensed by MIT to Akamai. Limelight noted in its filing that “a permanent injunction could prevent us from operating our [content-delivery network] altogether.” The U.S. District Court for the District of Massachusetts scheduled a hearing in the case for May 2007.

Limelight’s revenue last year more than tripled, to $64.3 million, from $21.3 million in 2005. It recorded a net loss of $3.7 million for 2006 compared with a profit of $400,000 the year prior. The company said it had 158 employees as of March 1.

The company’s S-1 said it expects to use the proceeds from the IPO to fund capital expenditures for network and other equipment, as well as for working capital and other general corporate purposes. In addition, Limelight said it intends to use approximately $23.8 million to pay off its credit facility and it “may use a portion of the net proceeds to acquire complementary businesses, products, services or technologies.”

Limelight, founded in June 2001, is based in Tempe, Ariz.