bloggingbuyouts

Shares of Citrix Systems Inc. (NASDAQ: CTXS) are up more than 7% today on rumors that the virtualization software vendor could be a takeover target. Citrix has been considered more of a buyer than an acquisition candidate, having last year closed a $500 million acquisition of XenSource Inc.

But now IBM Corp. (NYSE: IBM) and Cisco Systems Inc. (NASDAQ: CSCO) are sniffing around the company, according to the rumor du jour. Avian Securities analyst Jeff Gaggin says in a research note today that Citrix has developed a virtualization management offering that has become a "real threat" to rival VMWare Inc.

Following Citrix's XenSource deal, speculation arose that Microsoft Corp. (NASDAQ: MSFT) might take an interest in the newly enlarged company, mainly because of the long-standing marketing partnership between the two companies. But Gaggin argues that Microsoft prefers keeping its relationship with Citrix at the partnership level, being distracted with its attempt to takeover Yahoo! Inc. (NASDAQ: YHOO) and the development of its own internal virtualization offering.

Continue reading at TechConfidential.com.

When software virtualization company VMware Inc. (NYSE: VMW) went public this week and shares went directly into the stratosphere, the concept of "virtualization" suddenly became part of the common media jargon overnight. VMware basically sells products that create "virtual" computing environments from vast, interconnected resources. Why have a bunch of local and unused computing machines when you can string resources together and attain quite a bit more efficiency?

Well, VMware's IPO dust has settled, and Citrix Systems didn't spare a breath in announcing the $500 million acquisition of software virtualization company XenSource. Call this the week of virtual bops in the market.

Fresh off the completion of advertising company aQuantive, Microsoft Corp. (NASDAQ: MSFT) has just completed the largest acquisition in its history at over $6 billion. Is it ready for another one? Some analysts are pegging the possible acquisition of Citrix Systems (NASDAQ: CTXS) by the software giant based on how Citrix Systems has grown in the past (largely by having access to Microsoft's source code to build its own software), as well as the relationship XenSource already has with Redmond. Is a buyout in the air?

There are probably some technical issues that prevented Microsoft from acquiring XenSource itself, but by gobbling up Citrix after it completes swallowing XenSource, Microsoft could stand up pretty well in an instant in the software virtualization field -- and it definitely has the cash. Although Microsoft has been called a laggard and accused of lacking innovation for quite some time, the software company shows a decent bit of forward-thinking with its recent aQuantive acquisition and this rumor (a good one) of a forthcoming Citrix Systems buy. Is Redmond dead any time soon, as many Google Inc. (NASDAQ: GOOG) fans are fond of predicting? I highly doubt it.

Disclosure: I own MSFT shares as of 8-16-07.