Microsoft (MSFT) Buying Limelight (LLNW) Rumor Update: New Details
Last week, we reported a CDN industry rumor that Microsoft (MSFT) wanted to buy Limelight (LLNW). This week, another industry source confirmed hearing the same thing from within Microsoft. Our second source's understanding of the situation is this:
Microsoft has recently settled on a single P2P architecture to support its Windows Live, MSN, and other online businesses (the company previously had three separate systems). Our source believes Microsoft also wants to own and operate its own CDN architecture and sees Limelight as a quick solution to the CDN piece of the puzzle.
Our source is not clear on what Microsoft would do with Limelight's existing clients. It is possible the contracts could be sold to another CDN vendor. It is also possible that Microsoft could actually go into the CDN business as part of a larger cloud-computing services strategy.
(After reading our last report, CDN analyst Dan Rayburn said that Limelight does not currently have the capability to support "cloud computing." We are assuming--perhaps wrongly--that such a capability could be added).
The current stumbling block to a Microsoft-Limelight deal, our source believes, is price. Limelight just went public at $15 a share, so it is presumably insisting on a takeout price that is higher than that. Given that Limelight is currently trading at $6.50, however, this would represent one heck of a premium to today's stock price. So it's easy to believe that the problem is price.
See Also:
Rumor: Microsoft Wants to Buy Limelight
Surprise, Surprise: Limelight Getting Pants Sued Off
Microsoft has recently settled on a single P2P architecture to support its Windows Live, MSN, and other online businesses (the company previously had three separate systems). Our source believes Microsoft also wants to own and operate its own CDN architecture and sees Limelight as a quick solution to the CDN piece of the puzzle.
Our source is not clear on what Microsoft would do with Limelight's existing clients. It is possible the contracts could be sold to another CDN vendor. It is also possible that Microsoft could actually go into the CDN business as part of a larger cloud-computing services strategy.
(After reading our last report, CDN analyst Dan Rayburn said that Limelight does not currently have the capability to support "cloud computing." We are assuming--perhaps wrongly--that such a capability could be added).
The current stumbling block to a Microsoft-Limelight deal, our source believes, is price. Limelight just went public at $15 a share, so it is presumably insisting on a takeout price that is higher than that. Given that Limelight is currently trading at $6.50, however, this would represent one heck of a premium to today's stock price. So it's easy to believe that the problem is price.
See Also:
Rumor: Microsoft Wants to Buy Limelight
Surprise, Surprise: Limelight Getting Pants Sued Off
Goldman Reams Clients With Limelight; Feels Pain, But Sits Pretty
Limelight Shares Shattered as it Blows First Quarter Out of the Box
I still don't buy this rumor and I agree with Dan Rayburn, it would be a pointless purchase for MSFT. Anything they'd get from Limelight they could build themselves easily (and probably already have).
huh?
Its just software. I'm not quite sure what he means. Heck I'm not even sure what the proper definition of "cloud computing" is that Limelight doesnt fit.