NEW YORK ( TheStreet) -- Nothing gets investors going like a great dose of M&A speculation.When it was announced Monday that Oracle (ORCL) had acquired Acme Packet (APKT) for $2.1 billion, I immediately began canvassing the sector for the next possible candidate.
This means ALU is still trading at cheap valuation, making it an attractive candidate for a company such as Cisco (CSCO - Get Report). Granted, ALU is expected to lose money this year - that's not a surprise. However, with a recent financing pact worth $2.1 billion, ALU has been given time to get its house in order. This new financing now gives the company some flexibility and latitude to extend maturities accordingly. With liquidity no longer a concern, ALU can begin focusing on execution to enhance shareholder value. With some recent upgrades under its belt, there are now a few more catalysts making the shares more appealing. With ALU trading considerably below its true potential, Cisco should follow Oracle's lead and make the call. For instance, many underestimate ALU's IP and optics business, which is trending higher. Plus, the company's newest routing platform already competes well against similar models from Cisco; in some cases ALU's model is better. Likewise, ALU has an impressive CloudBand strategy that rivals of some of the more prominent names in the industry, even Cisco's. For this reason, I question how long it will take before Cisco realizes it needs ALU.
Cisco's recent acquisitions, which includes paying $141 million in cash for Cariden and another $1.2 billion for Meraki suggests the company will leave no stones unturned to produce growth.