AFI BLOG: Media and Technology

Is Limelight in Play? - Seeking Alpha

As I reported last week, Limelight Networks (LLNW) shares got a boost last week from a blog post by Henry Blodget asserting that the company could be the target of an acquisition by Microsoft (MSFT).

Tuesday, Cowen’s Jennifer Adams weighed in on Blodget’s theory. She says Limelight is “one of the few” pure-play content delivery networks “with the scale to be attractive” to a potential buyer. She notes that interest in the sector is high: AT&T (T) has said it will get into the CDN market, and she notes that Disney (DIS) has made two investments in CDN startups. “We expect big fish like these to grow their CDN assets via both investment and acquisition,” she says. Adams has a Neutral rating on the stock, but nonetheless says there could be “substantial upside” if the company were acquired.

She agrees that MSFT, the company’s largest customer, is a potential buyer. She also notes that Goldman Sachs (GS) is in driver’s seat, with a 37% stake in the company. Adams notes that Goldman’s basis in the stock is $3.26 a share.

Limelight today fell 10 cents to $6.54. The stock had jumped 64 cents Friday; the stock had gained 15% over the previous three trading days.