Shares of Legato Systems Inc. (Nasdaq: LGTO) jumped almost 8 percent to $5.99 per share in midday trading Friday, following rumors that the storage software company is shopping for a buyer.
The two-year-old rumor, reported again by Reuters today, has had the industry guessing at the most likely suitor for a while -- and the odds-on favorite, observers say, is EMC Corp. (NYSE: EMC).
The storage giant has made no secret in the past 18 months of its intention to get into the software market. In an interview last year with Byte and Switch, Chris Gahagan, EMC's SVP of storage infrastructure software, said EMC covets the backup and recovery market, a sector dominated by two companies: Veritas Software Corp. (Nasdaq: VRTS) and Legato (see the interview with Chris Gahagan, SVP Storage Infrastructure Software, EMC).
"We believe that there's a huge opportunity for us in that space, given that we believe we can use new technology to shift how customers do backup," Gahagan said at the time. "Clearly, in the infrastructure space... they [Veritas] are one of the leading providers... But I think if you talk to customers, they are wanting some choice."
While Legato has put up a decent fight against Veritas in the backup market, analysts say the company has struggled to keep up and is a weak second. With EMC behind it, however, this picture could change swiftly.
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