Market News

The Industry Rumor Mill: Oracle, Brocade, Facebook, Verizon, CenturyLink & Apple

The data center sector is rarely short of a rumor, particularly as the industry is usually rife with mergers, acquisitions and asset sell-offs.From whispers of bids and buy-outs to the possibility of a major acquisition flop and a new 146 acre data center campus, we’ve summarized the latest talk in town affecting the data center/tech sector:Oracle to Make a Bid for Accenture?Off the back of Oracle’s recent earnings call which saw the company report a 3% increase in operating income, there is now talk of the software giant making a bid for global consultancy house, Accenture.Described as “an immensely bold, complicated and pricey move” by The Register, rumors that Oracle hired M&A specialists to explore the feasibility of a buy-out was enough speculation to give Accenture’s stock a 1.64% boost last week.An unnamed source commented on the potential move: “While these things have a habit of fizzling out, there are some fairly serious players around the table.”Oracle’s 2016 acquisition of ERP business Netsuite required a whopping $9.3bn investment but it has helped significantly grow Oracle’s cloud sales, an encouraging move for shareholders who have no doubt been following the decline of the company’s traditional licensing business.Brocade Buyer Rumors SquashedBroadcom’s $5.5bn acquisition of Brocade is still yet to close, but that didn’t stop the rumors circulating as to who would be the buyer for Brocade’s data center portfolio which its new owner was not interested in keeping.There was talk of significant interest from private equity firms and technology vendors according to “industry observers” eager to see an owner’s name attributed to Brocade’s assets.However, on the 29th of March, Broadcom squashed any speculation and confirmed its intention to sell Brocade’s $55m data center networking business to Extreme Networks. The President and CEO of Extreme Networks, Ed Meyercord, said:“[This] announcement, coupled with our recent announcements regarding our position as the stalking horse bidder of Avaya’s networking business and the successful completion of the integration of Zebra’s wireless LAN business, along with Extreme’s organic investments in R&D, will result in a state-of-the-art, newly-refreshed portfolio of enterprise solutions for our customers.”Facebook Likely to Announce A 146-Acre Data Center CampusCould "Project Raven" be a cover for Facebook's new 146-acre data center campus in the city of Papillion?According to sources, a data center project by this name with 2.4 million sqf of flooring development has progressed through several layers of approval despite there being no certainty as to who is behind the project.One thing is certain however, Facebook will make a big announcement at Papillion City Hall next week. The social media giant is keeping quiet about the purpose of the announcement however, the Omaha World Herald has reported that the name listed on the data center applications is "Raven Northbrook LLC" which just so happens to have the same address (1 Hacker Way, Menlo Park, California) as Facebook's headquarters.Verizon to Buy Into Cable with Comcast or Charter?A conversation between Verizon’s CEO and “friends” at a Las Vegas Consumer Electronics Show in January made it into the New York Post with speculation that Verizon is considering a purchase of one of the largest cable companies in the United States.Industry experts weighed in, indicating that if Verizon was on the path to cable it was likely to end with an acquisition of Comcast or Charter.Whilst an acquisition of this magnitude seems unrealistic to many, the wireless giant is already pouring money into building itself up as a powerful 5G wireless provider, and the infrastructure of a big cable company may be the best way to get there.A huge investment that puts this out of reach it may be, but a study commissioned by Qualcomm indicated that 5G technology could see a boost to global economic growth to the tune of $3 trillion from 2020 to 2035. It’s no surprise then that the four major US wireless operators - Verizon, AT&T, Sprint and T-Mobile - are already running 5G trials. So maybe this rumor does have legs?CenturyLink and Level 3 Deal in Trouble?With overwhelming support from both CenturyLink and Level 3 shareholders, and clearances received from various state regularly bodies, the progress of this multibillion dollar merger has been promising to date.Whilst the Department of Justice, the Federal Communications Commission (FCC) and other state approvals are still needed, it seemed little could get in the way of this deal due to complete by September this year.However, it has been revealed that competitor protests from Frontier and Windstream, and concerns from industry group, Incompas, have been filed with the FCC.Frontier and Windstream complaints relate to Level 3’s improper payment of wholesale services which seem unlikely to cause damage to the CenturyLink merger itself.However, the industry group representing competitive service providers, Incompas, believes the merger will suppress competition in the fiber-based business services market. Specifically stating that both companies are avoiding demonstrating how the deal “serves the public interest” and “the applicants gloss over the public interest concerns that the transaction will actually undermine competition by eliminating choice of last-mile facilities-based providers for enterprise customers in many buildings.”Whilst CenturyLink’s response is that this issue is not “competitively significant” as it affects just 80 buildings, it has created some ripples across the industry with the FCC now needing to weigh in on whether the transaction “will enhance, rather than merely preserve, existing competition.”If Content is King, then Apple Could Marry Into RoyaltySitting on the largest cash reserve known of any private company in history, Apple could spend its $200bn stockpile on a long list of ventures.Whilst the possibilities regularly draws speculation and interest from across the global tech sector; a note that RBC analyst, Steven Cahall, sent to clients last month had investors, bloggers and traders in a frenzy.Cahall's theory is that if Apple has its eyes set firmly on owning its own exclusive content (because content is king after all), then Disney is a marriage worth looking at."Bulls think it portends well for a swan song exit via a sale to a giant like AAPL" were Cahall's words and he's not the only one speculating of the possible union. Margate Capital's founder, Samantha Greenberg, also said in an investor letter last year that Disney was a "logical acquisition target" for Apple, as did Liberty Media Chairman, John Malone.Business Insider's report on this rumor is that it's a "story that won't be dying down anytime soon".

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