Except for another blown quarter, it has been all quiet on the Limelight (LLNW) front since we heard last month that Microsoft (MSFT) wanted to acquire the company. Curious about the latest on this, we checked in with a CDN industry source, and here’s what we got:
After connecting some dots, the source believes that the Microsoft takeover possibility is less likely than it was a month ago–before Microsoft made its play for Yahoo. Specifically, the source hears that Limelight has begun investigating business development and/or M&A deals that wouldn’t make sense if it were about to be acquired by Microsoft. Although concluding that Limelight-Microsoft talks are off on the basis of this is obviously speculative, the theory makes sense in light of recent developments: If Microsoft buys Yahoo, the strategic rationale for buying Limelight–turbocharging its global cloud-computing infrastructure and expertise–would go away.
Meanwhile, the source says that another Limelight takeover deal makes a lot more sense and speculates that it might happen sooner rather than later. (The source has no information here: s/he is just putting two-and-two together). Specifically, the source thinks Level 3 (LVLT) might buy Limelight.
Why? Four reasons, all of which make sense:
- Level 3 is trying to develop a CDN business but still lacks the expertise, technology, and client list that Limelight has.
- Level 3’s own infrastructure would reduce Limelight’s bandwidth costs, thus improving its financial performance.
- Both stocks have been pulverized so Limelight wouldn’t have to hold out for a now-dreamy takeout price above the IPO price.
- A combined Level 3-Limelight would be more competitive than either company individually.
To be sure, in its short, embarrassing history as a public company, Limelight has demonstrated nothing but an ability to blow quarters, float feeble excuses, and hose any trader gullible enough to believe in it. But the company does have revenue, clients, and technology that would be helpful to a stumbling wanna-be CDN like Level 3.
See Also: Microsoft Buying Limelight rumour Update
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