Geeks With Blogs

News Clicky Web Analytics

web stats View David Caddick (davidcaddick@gmail.com)'s profile on LinkedIn

Search this Site!

Locations of visitors to this page
View My Stats eXTReMe Tracker
This posting is provided "AS IS" with no warranties, and confers no rights. The opinions expressed within are my own and should not be attributed to any other Individual, Company or the one I work for. I just happen to be a classic techie who is passionate about getting things to work as they should do (and are sometimes advertised and marketed as being able to?) and when I can I drop notes here to help others falling in to the same traps that I have fallen in to. If this has helped then please pass it on - if you feel that I have commented in error or disagree then please feel free to discuss with me either publically or privately? Cheers, Dave
Thin Clients, VDI and Linux integration from the front lines.... Raw and sometimes unedited notes based on my experiences with VMware, Thin Clients, Linux etc.

One thing is for sure, if Microsoft were to buy/offer XenSource $1b and trump Citrix - then I think we would be able to safely say "the bubble has burst" on Tech Stocks again....

Having said that, this <cough> reporter from TheDeal then goes on to compare Microsofts Virtualization efforts to Google's acquisition of Green Border for the browser virtualization technologies - so on that little insight I'm not going to be worrying too much if I was Citrix.

But in fairness, there is a very good point made towards the end of this article when it is pointed out:

Microsoft also has garnered what it needed from its XenSource partnership, and doesn't need much more form the company. Like Citrix, which also had inked partnerships with Microsoft, XenSource signed a pact in mid-2006 securing exclusive access to the Viridian source code.

For Citrix, the XenSource deal makes sense. Not only will the company get a virtualization product to market sooner, but 'XenSource fills out Citrix's technology stack and offers another long-term growth engine in the company's expanding portfolio,'

So with Citrix effectively now gaining "exclusive access to Microsoft's Viridian source code" via the purchase of XenSource who would like to bet against Mark T and Citrix being able to push Citrix to the new $5b mark?

Redmond to spoil XenSource buy?
by Cheryl Meyer
Updated 12:03 PM EST, Aug-20-2007

As the dust settles on an active week in virtualization software, some observers speculated that Microsoft Corp. could attempt to top Citrix Systems Inc.'s $500 million bid for virtualization specialist XenSource Inc.

Citrix announced Wednesday, Aug. 15, it would buy XenSource, a Bellevue, Wash. provider of open source server and desktop virtualization software, for $500 million in cash and stock. That deal, scheduled to close in the fourth quarter this year, followed the public debut Aug. 14 for VMware Inc., the clear leader and a XenSource and Microsoft rival in the virtualization software sector. VMware roared out of the gate with a $1.1 billion initial public offering and was valued at $19 billion.

'It is quite likely that Microsoft may put in a competing bid on XenSource to the level of $1 billion,' said Trip Chowdhry, senior software analyst at Global Equities Research. 'And I would say if Microsoft puts in a bid, IBM won't stand still.'

Chowdhry said a Microsoft offer would make sense for several reasons. The Redmond, Wash.-based software giant has 'been a total failure when it comes to virtualization,' he said. Microsoft is in the process of building its own virtualization technology, called Viridian, which will be integrated with its Windows Server product slated to be released in the third quarter of 2008.

XenSource and Microsoft have partnered since last year, and XenSource is located close to Microsoft's headquarters. Additionally, Microsoft archrival Google Inc. in May snapped up GreenBorder Technologies Inc., a provider of browser virtualization security software.

Microsoft is known for being reactive when it comes to acquisitions. This attitude resulted in the $6 billion purchase of aQuantive Inc., a Seattle online advertising firm, after several of its competitors — including Google — had already snapped up larger online advertising rivals. Microsoft completed the aQuantive deal Aug. 14; the purchase price represented an 85% premium to aQuantive's closing price prior to the transaction announcement in May.

Analysts were far from unanimous regarding whether Microsoft will move on XenSource.

'I see nearly zero possibility Microsoft steps in and bids,' said Walter Pritchard, a financial analyst at Cowen and Co. LLC. 'Microsoft is already too far down the road with its own technology in this area.

'What Microsoft releases will be integrated with Windows Server and to restart their current efforts this late in the game would push them beyond acceptable delivery timeframe,' he added.

Pritchard said Microsoft also has garnered what it needed from its XenSource partnership, and doesn't need much more form the company. Like Citrix, which also had inked partnerships with Microsoft, XenSource signed a pact in mid-2006 securing exclusive access to the Viridian source code.

XenSource also is part of the open source software movement, having built its business around open source Xen hypervisor, which is used by Red Hat Inc. and other Linux-based companies.

'Open source remains a sticking point for the powers that be in Redmond,' the 451 Group said in an Aug. 15 report.

XenSource generated less than $5 million in revenues in 2007, so a $500 million price tag — let alone $1 billion — is considered rich. Still, IDC forecasts the server virtualization market will reach $3.5 billion in 2011. While VMWare is the clear leader in the sector with about 85% market share, XenSource ranks second, making its technology highly valuable to any number of potential buyers.

For Citrix, the XenSource deal makes sense. Not only will the company get a virtualization product to market sooner, but 'XenSource fills out Citrix's technology stack and offers another long-term growth engine in the company's expanding portfolio,' wrote Merrill Lynch analysts Garrett Bekker III and Edward Maguire in an Aug. 16 report.

Many industry experts said the acquisition could make Citrix itself a more attractive target not only for Microsoft, but others as well, including Hewlett-Packard Co., IBM, Cisco Systems Inc., EMC Corp. or even security giant Symantec Corp.

But Microsoft tops the list of most analysts.

'The close relationship both companies enjoy with Microsoft suggest a more formal merger could make sense down the road,' Bekker and Maguire wrote.

William Fellows, a principal analyst at The 451 Group in London, said a Microsoft-Citrix combination is more likely than a Microsoft-XenSource acquisition.

'If Microsoft was shaping up to buy XenSource, it's almost like the dog chasing the bus,' he said. 'The dog gets the bus but what the heck does it do with it then? It make more sense for Citrix to ingest that thing.'

Whether or not a bid for Citrix or XenSource emerges, the company appears set on independence and growth, said Richard Sherman, managing director of equity research at MKM Partners LLC.

'The takeover play is always there, but Citrix is making a real effort to become a large software and technology vendor and move beyond their mid-cap range,' he said.

Citrix declined to comment.

Posted on Tuesday, August 21, 2007 1:34 PM Citrix , Microsoft Tips , VMware and other Virtualization tools | Back to top


Comments on this post: Redmond to spoil Citrix's XenSource buy? I don't think so.

No comments posted yet.
Your comment:
 (will show your gravatar)


Copyright © Dave Caddick | Powered by: GeeksWithBlogs.net