Friday, May 23, 2014

Seeking Alpha: NetApp Grinding Out Cash-Rich, Growth-Poor Quarters

Conditions in the storage market are pretty lousy. Smaller, newer companies like Nimble Storage (NMBL), Pure Storage, and Tintri are doing alright, but the legacy players like EMC (EMC), IBM (IBM), and NetApp (NTAP) are having a rough go of it as enterprise customers run older systems for longer and continue to approach storage spending cautiously as they evaluate cloud and flash alternatives.

I don't believe that NetApp is never going to grow again, but I do think the company is paying a price for years of prioritizing margins and cash flow and being reticent to spend its cash on M&A to support its growth prospects. I believe EMC (which I own) has done a better job of diversifying its business and positioning itself for the changes underway in the storage market, but NetApp shares look over-punished and undervalued provided that emerging threats like cloud and software-defined storage do not completely gut the market.

Read more here:
NetApp Grinding Out Cash-Rich, Growth-Poor Quarters

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