Deal Chatter Gravitates to Data Centers

Fridays are always big days for loose speculation.

Today's largely unfounded traders' desk discussions turned to Juniper (JNPR Quote)and F5 (FFIV Quote).

The Juniper buzz focused on its possible interest in acquiring a data center or storage shop. And separate speculation involved Hewlett-Packard (HPQ Quote) or Cisco (CSCO Quote) taking an interest in a data networking specialist

The hot takeout notions come amid a rather heated M&A climate in the data networking sector.

First, Oracle (ORCL Quote) swooped in with a surprising bid for Sun Micro (JAVA Quote) after IBM (IBM Quote) got cold feet, in April.

And then there's the ongoing three-way maneuverings between EMC (EMC Quote) and NetApp (NTAP Quote) for data efficiency specialist Data Domain (DDUP Quote), further illustrating the degree of interest in the space.

The buzz around Juniper on Friday is that the company may want to branch out beyond its core Internet router business and into the incredibly sexy data center segment. Juniper, it can be argued, is somewhat boxed in as a distant second player in an increasingly Cisco-run Internet infrastructure.

Certainly Juniper could use a new market to spread its Internet gear expertise around, but typically the Sunnyvale, Calif. tech shop has been seen as a target of acquisition not a hunter. And Juniper watchers will recall that the company's big foray into network security with the NetScreen buy was all but a disaster.

Similarly, F5 has often been considered a takeout candidate as its data center gear continues to hold a strong position in the hardware market.

The thinking is that H-P could use F5 as a defensive move to counter Cisco increased interest in the data center. And by some measures, F5 would be a somewhat painless pickup by Cisco. F5 commands luxuriously wide 70%-plus gross margins that would be financially accretive to Cisco's data domination strategy.