Falling share price exposes NetApp NetApp's market worth has dropped 51 per cent in 16 months, making it vulnerable to a takeover. In February 2011 NetApp shares cost $60.60 and its market capitalisation was $21.9 billion. Now it's worth just $10.9 billion with shares trading at $30.02. Why? Investors think it has gained storage market share relative to Dell, …
Even after the share price drop, they are selling at a market cap of $10.85 billion and a P/E of 19. If you think about the premium which would have to be paid for an acquisition, you are talking about $12-14 billion for what is still predominately a filer company. Oracle paid $5.5 billion net of cash for the whole of Sun. While Sun and NetApp were/are going in opposite directions, it is still too rich for a company that operates in a storage niche. It would be the largest hardware acquisition since Compaq. Too much downside risk of people coming in and taking away their niche... especially as all of the major players have added NFS and similar software to their mid-sized arrays, EMC's VNX, HDS's HUS, IBM's V7000, etc.
Cisco is the best candidate. Storage is the obvious gap in their portfolio. They would be axing their relationship with EMC though. Possible, but not at this price. Better acquisition targets at lower prices, such as BMC.
There's probably a shit load of Shorts open on the stock. In other words, there is an incentive to drive the stock price downwards. It's then possible to make money on the falling stock price, then let the brakes off (close all the shorts) and make money as the price rises again.
Fairly standard faire.
I bought some NetApp stock last week. Their numbers aren't that bad, they just are having issues with this all happening during a bad time for the Market.
EMC has absolutely taken back some of NetApp's share. Management keeps trying to blame the sales market (I forget the terms used), but nobody is buying it. The next step with a continued fall is to change up the upper management, but in the end NetApp is a major playor and there's nobody in the industry that needs what NetApp has enough to buy them. Engenio was a superb purchase for them, not for the hole in NetApp's portfolio, but because it's a product OEM'd by enough companies to make it a solid steady income.
The real winner is all the EMC VNX and NetApp customers enjoying lower prices.
EMC is hinting at abandoning non-VMWare platform partners, from a software perspective. With EMC making servers, with the hypervisor, with the storage - Cisco is getting pushed out of their partnership, after having lent their credibility to EMC as a cloud provider.
Cisco is foolish to have entered a partnership with a partner [EMC], which is now building a [hardware] stack to replace them. Cisco should have purchased Sun [for servers, hypervisors, OS, disk storage, and tape storage] and owned the Data Center... instead of being put into this position.
NetApp would be the second best choice choice, now that Cisco finds itself in a competitive relationship with their storage partner, and NetApp is becoming increasingly available.
Cisco is still missing a hypervisor. Xen or KVM on an OpenSolaris variant with ZFS would give Cisco the joint hypervisor/storage software it needs to compete.
"With EMC making servers... "
what mystical server range are you talking about?
Cisco is the one making servers these days, occupying the number 2 and number 3 spots in US and Emea respectively, in terms of new kit sales...
Cisco's partnered up with both EMC and Netapp at this moment for Vblock and flexpod solutions, with very little care on EMC's side...
I could imagine Cisco wanting a piece of the storage pie, but as with the UCS systems, they are more likely to try and reinvent a storage box to integrate in their Unified view on IT.
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