Saturday, May 23, 2015

Seeking Alpha: NetApp's Best Hope Is Probably Its Wallet

Given the operating struggles that are increasingly evident with each quarter, NetApp (NASDAQ:NTAP) may be best served by thinking along the lines of, "if you can't beat 'em, buy 'em". As is, I think NetApp has painted itself into a corner such that if it doesn't do something significant via M&A, the company is probably done as a real force in storage. Nimble (NYSE:NMBL) and Tintri are chewing on the company, and while Nutanix seems to talk and think more about EMC (NYSE:EMC) and VMware (NYSE:VMW), I can't see how the company's position in hybrid cloud today is encouraging for NetApp.

NetApp longs are not going to like this (and yes, I own EMC shares), but I don't see a very bright future for ONTAP, and I think the company's relative strength in the mid-range market is going to mean less and less with what's happening in hyper-converged infrastructure and hybrid clouds. While NetApp may have more value than the market credits today on the basis of a legacy business (external arrays aren't going to vanish tomorrow), the product revenue growth that the Street generally requires as a prerequisite for bullishness is going to be tough to create. With that, NetApp's best asset may be its nearly $4 billion in net cash and the opportunity to acquire a business like Nimble, Tintri, Tegile, or Nutanix and reinvigorate its positioning relative to where storage seems to be heading.

Read more here:
NetApp's Best Hope Is Probably Its Wallet

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