When upstart content delivery network Limelight Networks (Nasdaq: LLNW) reported its quarterly earnings last week, there was a lot of talk about a bloodbath in the CDN space, as it and its rivals (Akamai chief among them) are seen as being engaged in a brutal price war.  The company’s weak earnings only seemed to bolster this case. The company has filed its 10-Q and it specifically draws attention to the significant year-over-year jump in stock-based compensation expenses ($12.2 million vs. $.03 million).  Without that jump, it would have been a profitable quarter for the company, perhaps calling into question the notion that the CDN space is really looking so ugly.  This point seems to have gotten overlooked in the tables of the company’s quarterly earnings report. Akamai’s own earnings have disappointed investors so far this year, although mainly because the company has failed to surpass expectations, not because the results have been particularly weak.

SEE ALSO: Earnings: Limelight In Losses in Q2; Shares Down 36 Percent

In the quarter, Limelight also broadened its customer base, reducing its dependence on a narrow set of customers.  Last year, the company’s top 10 customers accounted for 54 percent of revenue, which is now down to 46 percent. In a separate filing, the company did report the potentially troublesome news news that Gary Valenzuela, a member of the company’s audit committee, has resigned.

Updated: Also from 10-Q, via AlleyInsider, MySpace seems to be transitioning from LLNW to Akamia…according to the filing, sales to “CDN Consulting,” which resold services primarily to MySpace, represented 21 percent of Limelight’s 2006 revenue, or about $13.5 million. In Q207, that business dropped to about 2 percent of Limelight’s revenue, or about $424K.

Disclaimer: Limelight is a sponsor.