Analyst Kaushik Roy with Choi and Pacific Growth Equities really stoked the fire of a longstanding rumor (repeat rumor) that Cisco would just love to buy storage king EMC. And while this won't happen, there are kernels of truth in there.

The first thing that sounded fishy about the Reuters story posted on Wednesday was that Roy's comments were a reaction to options purchases, "roughly 217,000 calls traded in EMC compared to 57,000 puts in the first half of the session."

The rumor helped fuel a discussion on TechWeb's Light Reading forum (full disclosure: InformationWeek and Light Reading are cousins under the TechWeb family). Still, there are a lot of factors that can cause a run on options, and acquisition talks are usually a good start.

However, Roy tempered most of his comments when I called him on it. While he did suggest if anyone would be interested in purchasing EMC, it would be Cisco, he maintains that it would be foolhardy to do so on a couple of levels. Primarily, Cisco's track record indicates a string of small purchases that complement its product line.

"What kind of message would buying EMC send to Cisco's partners like IBM and HP?" Roy said. "It would say that Cisco is now a major storage competitor and its ready to take on two major partners. That's not good for Cisco."

He also mentioned that a Cisco-EMC marriage puts Cisco in the role of having to steward production of EMC's hardware divisions, another pain point that Cisco would want to avoid unless provoked.

A quick call to Cisco's corporate development group also quelled any talk of an EMC buyout. The representative said it was "highly unlikely" that Cisco was going to spend money on all of EMC.

So why has this rumor lived for so long and gotten so many investors wild about it? Perhaps it's EMC's software spinoff VMware that has people excited.

Roy said if there is a Cisco-EMC deal in the works, it is more likely that it would be over VMware. This is, of course, dependent on VMware's need to sell. Given that virtualization is on the minds of CIOs these days makes it a gamble to disrupt the business by selling out.

Then there is Cisco's own virtualization effort -- VFrame Server Fabric Virtualization Software, which is having a great run on its own.

So, bottom line... It looks like Cisco-EMC is just talk at this point. Cisco-VMware could happen, but only given certain circumstances.

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