Henry Blodget at Silicon Alley Insider seems convinced that someone should buy content delivery network Limelight Networks (LLNW), but the likely acquirer seems to be a moving target. After a series of posts predicting Limelight would be bought by Microsoft (MSFT), Blodget now speculates that Level 3 (LVLT) may be a bidder and that a deal "might happen sooner rather than later." Interestingly, Blodget acknowledges that his source "has no information here: s/he is just putting two-and-two together."
I've been skeptical about the reports that Microsoft would acquire Limelight, since the two companies are already partnering on Microsoft's expansion of its own CDN infrastructure. It has certainly occurred to industry watchers that Level 3, which wants to grow its CDN business, might covet Limelight. But recent events suggest Level 3 may be taking a break from additional acquisitions, as Dan Rayburn notes in the comments at Silicon Alley Insider:
Level 3 buying Limelight is not a bad idea, but at this time, I don't think Level 3 shareholders would let Level 3 buy any more companies considering how many they have bought recently and how much pain they have experienced integrating them into Level 3. And with Goldman holding 35+ million shares and probably looking to get back to at least even to the IPO price, Limelight would have to get sold for some where around $500 million for that to happen.
Blodget outlines some rationales for a Level 3-Limelight deal, and then tees off on both companies:
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.
Ouch! Why is Silicon Alley Insider so focused on a Limelight deal, and the content delivery sector? It's worth noting that Kevin Ryan, the chairman and co-founder of Silicon Alley Insider, is also the co-founder and chairman of CDN startup Panther Express. Ryan's dual roles are fully disclosed, which is a good thing, and perhaps provides context for SAI's keen interest in content delivery M&A.