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NetApp Put in Play

David Faber said on air that “38% of NetApp’s market cap is in net cash

Activist shareholder Elliott Management, the hedge fund that pushed Novell and BMC into selling out and has Compuware on its list, is muscling in on NetApp.

According to Bloomberg it has taken a “significant” position still under 5% in the data storage house, meaning to push for changes to the board and a cash return strategy.

It has supposedly been in talks with the company for weeks.

NetApp’s stock rose almost 7% to $38.67 after the Bloomberg story came out citing the inevitable unnamed “people familiar with the situation” and CNBC repeated the tittle-tattle adding that Elliott may go for a proxy fight.

David Faber said on air that “38% of NetApp’s market cap is in net cash. It has no staggered board and no poison pill, and it has no dedicated sales force for its storage product, and has to go through third parties. As a result, there has been the thought among some that it should be combined with a larger company. The company has very strong cash flow, but its capital structure is highly inefficient.”

Elliott has reportedly proposed a slate of new directors and Faber, who was working on the story before Bloomberg beat him to the punch, thinks the nominating process may have already happened, or may take place Thursday.

NetApp had a market cap that topped $13 billion Wednesday. It is now hovering close to $14 billion.

Meanwhile, Piper Jaffray claims NetApp is going cut 10% of its people, roughly 1,300 folks, basically to spiff up its financials.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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