Rumors made the rounds a few weeks ago about Cisco and Microsoft having acquisitive interest in F5 Networks. I dismissed those rumors, primarily because I’d heard them many times before, but also because they seemed illogical from the buyer’s and seller’s perspective.
Today, though, a rumor has surfaced suggesting EMC might acquire F5 Networks. This one is harder to dismiss; it could even be true.
EMC, as witnessed by its growing array of acquisitions, including its recent $2.1-billion purchase of RSA Security, has strategic designs on becoming a major player in the management and secure storage of content.
With that in mind, perhaps it would also want to own a market-leading position in the secure delivery and optimization of content across networks, including those dedicated to data-center virtualization. That’s one of the areas where F5 could prove valuable, both in generating new revenue streams and in helping to differentiate EMC from its primary competitors.
In recent years, through acquisitions, EMC has bolstered its product arsenal with email archiving, content management, server virtualization, and network- and application-infrastructure management, as well as the encryption technology it just received via its acquisition of RSA.
A buy into the fast-growing application-delivery and -optimization market would be a defensible, an entirely logical move for EMC. It could reasonably be argued, in fact, that EMC should have acquired F5 Networks before it bought, or instead of buying, RSA.
A couple factors that might discourage such an acquisition are EMC’s relationship with Cisco Systems, which competes against F5, and the unresolved stock-option backdating questions at F5. Then again, the Cisco-EMC relationship has seen better days, and the stock-option backdating issue would be a smaller distraction in a company EMC’s size than it will be within an independent F5.
Meanwhile, EMC CEO Joseph Tucci still has to make good on his promise to grow five of EMC’s businesses — VMware, storage virtualization, content management, resource management, and security — into revenue-generating engines of $1-billion each during the next two to five years.
If you look at F5, whose revenue still is growing in the range of 40 percent on a year-to-year basis, it could help EMC and Tucci reach their objectives in a few of those categories.