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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