Who Is For Sale This Time?

Summary:It seems the WLAN acquisition rumor mill is hot again after a recent drop in Aruba Network (ARUN) shares nearly a week ago. Still not trading near its most recent trough of $4.

It seems the WLAN acquisition rumor mill is hot again after a recent drop in Aruba Network (ARUN) shares nearly a week ago. Still not trading near its most recent trough of $4.29/share on July 14, according to Google Finance, I am not convinced that the next acquisition announcement will involve Aruba.The company, publicly traded and still letting the ink dry on it's government go-to-market partnership with Foundry, still seems a formidable pill for any other networking powerhouse - Juniper being everyone's favorite contender - to swallow.

Since the Aruba IPO, I've viewed the vendor in a separate class from most others in the WLAN space. Since the time of their decision to go public, we've seen many others' marques give way to more familiar brand names as the Wi-Fi buying spree has heated up. With a market capitalization of over $400M today and 2007 revenues of $127.5M - a number they seem on track to hitting again based on their most recent quarter ended - it seems unlikely that a major vendor would be willing to fork over even 1/2 revenues for a business line extension into enterprise Wi-Fi.

Meru Networks is another vendor that's often viewed as an acquisition target, and one that I've looked at as an attractive target for at least one vendor, and seems a more likely target because:

  • Meru is still a privately held company and, therefore, does not bear any value inflation from a public market
  • The company has a solid, if somewhat unorthodox, architecture that appeals to resource strapped organizations such as those in education.

Meru seems a bit unlikely due to:

  • The vendor's somewhat different "virtual cell"(PDF link) architecture - while not a requirement to use its gear - may seem a bit of a risky strategy to established and staid networking vendors.
  • The company has had noting short of surprising success since they were first included in a Forrester Wave in 2007, which could make them a bit pricey, compared to the dwindling field of independent WLAN vendors.

So, there it is, I'm drawing a line in the sand that the acquisition target is not Aruba, perhaps Meru and potentially another, even smaller vendor. Nothing short of hedging on my part, I suppose, but I will say this: WLAN is a logical line extension for Juniper, and I'm not ruling out - but rather expecting - at least one more acuqisition before the year is out.

Check back to see if I'm eating my words or linking back to my sagacious prediction come December.

Topics: Wi-Fi, Google, Networking, Start-Ups

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