NetApp Buys Engenio for $480M, Shareholders Not Satisfied
NetApp will pay $480 million in an all-cash deal to acquire the external memory division of LSI Corp., Engenio. The deal will close within roughly 60 days, and marks NetApp’s expansion into several new markets it claims will be worth $5 billion by 2014. As Bloomberg reports, “NetApp said the purchase will help it build networks for companies that operate memory-heavy applications like full-motion video capture, digital video surveillance and gene sequencing.”
Enenio’s buyout may turn out to be a very good investment on the long-run, but investors don’t seem to share this optimistic mindset. MarketWatch reports NetApp shares declined by 8.6% after the company made the announcement. Susquehanna analyst Jeffrey Fidacaro also cut his rating on NetApp from positive to neutral, citing challenged near-term revenue growth. If that wasn’t enough, IDC’s quarterly storage tracker revealed less than a week ago that Hewlett-Packard’s overthrown NetApp as the third largest player in the external disk storage manufacturing space.
NetApp’s $480 million acquisition of Engenio is a very notable but one, but it sure can’t beat Western Digital. The hardware giant is amidst the process of purchasing its competitor Hitachi (the Hitachi) for a whopping $4.3 billion. $3.5 billion will be paid in cash, and the remaining $750 million will be paid in via common stocks at $30.01 per share.
Hardware is one hot enterprise investment segment these days, but HTML5 and mobile platforms are not to be left behind. Motorola Mobility Ventures recently invested an undisclosed amount in cross-platform, HTML5-based mobile game developer Moblyng.
Moving back to some more serious hardware investments, IBM’s also joined in on the fun with a recent development in Asia. The company announced it plans to invest $38 million in the construction of a new cloud computing data center in Singapore. The center will serve as an extension of its massive globally-integrated cloud delivery network, which already includes 13 cloud labs.
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