NetApp’s Engenio Acquisition Should Lift Market Share
NetApp (NASDAQ:NTAP) acquired LSI Corp’s Engenio external storage system business for $480 million in March. NetApp, which is the third largest vendor of external data storage systems in the world after EMC (NYSE:EMC) and IBM (NYSE:IBM), said the acquisition will help it win business in the rapidly growing bandwidth intensive video and high-performance computing markets.
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The popularity of online video and the broad switch to digital data in various businesses are generating huge amounts of online traffic. This has led to increasing demand for effective storage products as well as cloud computing. According to some estimates, Engenio’s storage platform will allow NetApp to take advantage of a $5 billion incremental market opportunity over the next three years. [1] [2]
We believe that the additional capability to cater to a wider range of fast growing customers for its storage solution portfolio will boost NetApp’s market share of the storage hardware market (in terms of gigabytes). Upside to this market share, which currently stands around 11%, could lift NetApp’s stock value.
We currently have a $53.79 price estimate for NetApp’s stock, with storage hardware representing 41% of the firm’s equity value.
See our full analysis for NetApp stock here
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