Cisco/EMC: The rumor that keeps on giving

Comes up again like the change of seasons, even though Oracle was this week's potential bidder

Ah, the change of seasons. Every three months, we here in the Northeast are blessed to bear witness to the diversity of Mother Nature. Yep, we can count on the seasonal transition every quarter, every three months... 

Another thing we can count on just as frequently and regularly is another round of speculation that Cisco will acquire storage titan EMC. Wait a minute, you say... this time - this week - it's Oracle that will buy EMC, not Cisco! Ah, but the breezes swirling behind the gusts of the Oracle/EMC speculation are those we can count on every season: that Cisco will actually buy data center partner EMC. 

Investment firm UBS was quick to quash that scenario. In a bulletin issued this week, UBS says the Acadia joint venture formed by Cisco, EMC and VMware last year pretty much rules out any chance that Cisco will pony up the tens of billions of dollars required to take out the storage stalwart: 

Yesterday various press reports suggested EMC was a potential take-out candidate for either CSCO or ORCL... The size of EMC (~$45B market cap, vs. ~$7B of US domiciled cash for CSCO) and integration risk of such a deal make it very unlikely, in our view... The Acadia JV with EMC/VWM last year was the next best alternative to the risky acquisition of EMC. With this JV, CSCO enjoys unique advantages (Vblock architecture, Acadia as single point of contact for customers etc). 

But UBS is not saying never. EMC's assets and standing in the data center market are so vital to Cisco that it may swoop in if a competitor - like Oracle - attempts to marry the company. EMC is a majority owner of VMware, the virtualization darling of just about everybody in the industry, aside from its competitors in the hypervisor space: 

Acquiring EMC would be a bold move by CSCO as it would create a powerhouse in the Data Center with leading positions in Storage, Networking and Virtualization (e.g. through majority ownership of VMW)... If, however, another company did try to acquire EMC, we do think CSCO would consider a defensive acquisition of EMC to keep its current advantage with Acadia intact. 

As for Oracle? UBS's software team also finds it unlikely the database giant will make a bid for EMC "given size and other priorities," the firm's bulletin states.

Hold that thought for another two months. That's when fall gives way to winter...

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