Deep packet inspection (DPI) specialist Allot Ltd. (Nasdaq: ALLT) is reported to have been in takeover talks with applications delivery platform vendor F5 Networks Inc. (Nasdaq: FFIV), notes Azi Ronen on his Broadband Traffic Management blog.

Ronen, citing Israeli news site Calcalist (in Hebrew), notes that a deal with a price tag of US$450-500 million had been discussed and that Allot's share price leaped by nearly 14 percent last week to end July 1 at $17.97 as talk of the discussions leaked out.

Allot, one of the most experienced and respected DPI players in the sector, reported revenues of $57 million (up 36 percent year-on-year) and a net loss of $5.8 million for 2010. During the first three months of 2011 the company reported revenues of $17.2 million and a net profit of $1.6 million. (See Allot Reports Q4 and Allot Reports Q1.)

It's hard to imagine the company won't continue to grow. Allot is one of the leaders in a market that's set to ramp in the coming years as mobile operators deploy technologies, especially DPI and policy control platforms, that can help them manage their data traffic and develop new marketing strategies. (See DPI Market to Hit $1.5B by 2014.)

F5, meanwhile, is certainly upping its game in the telecom sector. In November 2010 it announced its Service Delivery Networking (SDN) proposition for mobile operators, based on its own applications management and network optimization capabilities and those of partners such as Openwave. Adding Allot to its portfolio would make sense. (See F5 Starts a Delivery Business, F5 Targets Telco Services and Openwave, F5 Team on Policy.)

— Ray Le Maistre, International Managing Editor, Light Reading