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Is NetApp the Next Target in the Storage Space?

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NetApp could be the next buyout target in the storage space

Previously in this series, we noted that after EMC, a leader in the storage space, became the acquisition target for Dell, there has been growing speculation about the next acquisition target in this space.

After the Dell–EMC deal announcement, NetApp, with a market cap of ~$9 billion, is the largest pure storage company left in this space. NetApp (NTAP) could be the next target after the Dell–EMC deal announcement. This deal dominated the NetApp Insight conference that was held in mid-October 2015. NetApp has had a rough time in 2015, as evident from the fall in its revenues, as well as a change in its CEO from Tom Georgens to George Kurian.

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EMC’s acquisition could spur spree in storage space

Dell’s acquisition of EMC could spur IT companies like Hewlett-Packard (HPQ), Cisco Systems (CSCO), Oracle (ORCL), and IBM (IBM) into action to gain a stronghold in the enterprise computing space.

Commenting on the increased focus on NetApp after Dell acquired EMC, Mark Peters, a storage analyst with Enterprise Strategy Group, noted that storage or platform vendors might respond to Dell’s move by buying their own storage vendors.

Peters stated, “They’re looking at Dell buying EMC for $67 billion, and then they look at NetApp as one of the last remaining storage vendors that hasn’t been consolidated.” He added, “They could step back and say, ‘Hmm, Dell bought a storage vendor, maybe we need one, too.’ A deal like that would primarily be about that vendor acquiring market share, and NetApp has a lot of happy customers.”

Investors can gain broad-based exposure to NetApp by investing in the PowerShares QQQ ETF (QQQ). QQQ invests ~0.19% of its holdings in NetApp.

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