The investment news service Street Account reported last week that there were “vague rumors” linking the two companies. That was apparently enough to trigger a sharp rally in the always-volatile shares of the internet infrastructure company.
In a research note, Piper Sandler analyst James Fish has laid out the logic—and issues—with a possible combination of Cisco (ticker: CSCO) and Fastly (FSLY).
On the one hand, he says, a deal could make strategic sense and help Cisco expand its reach in “edge cloud” computing, and could help Fastly accelerate growth and broaden its security capabilities. But Cisco has said it is not looking to do large M&A deals right now, Fish notes, and it has a new chief financial officer coming on board this month. (Former
(ADSK) CFO R. Scott Herren is replacing longtime Cisco CFO Kelly Kramer, who is retiring.)
Fish also thinks that Cisco is more strategically aligned with others in the content delivery network market, including
(AKAM). He asserts that Cisco is using Akamai for web-delivery of services, and says that “the two have a strong partnership.”
“While we are not outright dismissing the possibility… we lean toward this being improbable,” Fish writes.
Cisco on Tuesday declined to comment, citing a policy of not responding to rumors. Fastly did not immediately respond to a request for comment.
In trading Tuesday, Fastly shares were up 14.9%, to $98.15.
Write to Eric J. Savitz at email@example.com