The deal, which gives Microsoft (Nasdaq:MSFT) about a 1% stake in Akamai, values the one-year-old firm at a whopping $1.4 billion, this person says. Akamai offers services that speed delivery of Web pages, and the company has been capitalizing on growing concerns about Internet congestion. Closely held Akamai, Cambridge, Mass., announced the Microsoft investment Monday.
As part of its agreement with Microsoft, Akamai will develop a version of its computer-server software that can run on Microsoft's Windows NT operating system, which is primarily geared for business users. Until now, Akamai's software has run on Linux, a Unix-based operating system. The deal is important for Microsoft as it tries to aggressively position NT to compete with Unix.
Big investors are attracted to Akamai's proprietary software and network of about 1,200 computer servers, which are designed to speed up the transmission of content from Web sites to computer users. Akamai's tech-nology addresses a perennial problem -- lengthy download times for popular Web sites -- by shifting data to servers closer to users. Akamai's customers include the popular Web portal Yahoo! Inc. (Nasdaq:YHOO), CNN, retailer J. Crew Group Inc. and the Discovery Channel. Last month, Akamai received a $49 million investment from Cisco Systems Inc. (Nasdaq:CSCO) and about $12 million from Apple Computer Inc. (Nasdaq:AAPL).
Akamai was founded in August 1998, based on the initial work of a math professor at the Massachusetts In-stitute of Technology and one of his students. Last month, Akamai filed a registration statement with the Secu-rities and Exchange Commission for an initial public offering.