Emulex Buys Into Network Monitoring

Storage networking vendor Emulex Corp. (NYSE: ELX) is making a play at networking in general, announcing Wednesday afternoon that it's acquiring Endace Ltd. (London: EDA)
Endace makes gear for network performance management, a sector that's heating up as 10Gbit/s and faster speeds become ubiquitous and as virtualization makes it more difficult to know exactly what the network is doing.
"One of the keys to having a successful networking story is that you need to know your network," says Zeus Kerravala, principal analyst with ZK Research . "Legacy tools just aren't meant for this era of virtualization."
The deal, for 500 pence per share, or roughly $130 million, is expected to close by the end of March. Endace recently moved a lot of its operation to Sunnyvale, Calif., but it's still a New Zealand company at heart -- and in legal terms. The deal is subject to terms of the New Zealand Takeovers Code, which is probably quite normal but sure sounds ominous.
Why this mattersEmulex is a storage vendor that has aims on becoming more of a networking vendor, Kerravala says. And buying into monitoring and management is a surprisingly savvy first step, he thinks.
"And the trend has been for networking vendors to try to provide more visibility into the network," he says, pointing to the fact that Cisco Systems Inc. (Nasdaq: CSCO) keeps buying Service Provider Information Technology (SPIT) companies. "I don't think this has anything to do with their legacy market, the storage market. I think it's, to use a hockey analogy, skating to where the puck will be."
Kerravala isn't impressed with the acquisition price at first glance. "When you consider the multiples management vendors are going for, that's not very expensive," he says.
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