It lost the battle for deduplication technology vendor Data Domain, so what’s the next move for NetApp? Some analysts are speculating it may not get a chance to call the shots and could, in fact, be the next takeover target.
This week NetApp gave up the battle to takeover Silicon Valley neighbor Data Domain after it couldn’t compete with the much deeper war chest of East Coast storage giant EMC Corp. It doesn’t walk away from the takeover battle empty handed, however – it will get to keep a $57 million termination fee.
NetApp Chairman Dan Warmenhoven tried to put a positive spin on the lost battle, saying he remains highly confident in “our already compelling strategic plan, market opportunities and competitive strengths.” However, several analysts warned the loss of Data Domain could expose weaknesses in the company’s product portfolio and could make it a takeover target for bigger storage players like IBM looking to compete against a stronger EMC.
Ashok Kumar, an analyst with Collins Stewart, told Bloomberg News that the industry is going through a consolidation phase and the failed takeover bid for Data Domain makes NetApp vulnerable. “In this market, either you’re a consolidator or you are consolidated – and if you don’t fall in either category you are marginalized,” he said.
Brent Bracelin, an analyst with Pacific Crest Securities in Portland, said that in addition to IBM, Hewlett-Packard may now also see NetApp as a tempting acquisition.
For the most part investors seemed inclined to believe dropping out of the bidding war made sense for NetApp or that it may, in fact, attract interest from suitors. The company’s shares were trading strongly higher Thursday.
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