'Mad Money' Spotlight: Cramer on NetApp

Last night, Jim Cramer brought some clarity to the latest head-scratching movements of NetApp(NTAP Quote).

Toward the end of May, the Sunnyvale-based data storage company announced a bid to takeover Data Domain(DDUP Quote). The deal was priced at $25 per share, coming in at $1.5 billion net cash and equaling a 40% premium on Data Domain's price. Cramer said, typically, an acquirer will watch its stock price fall after a merger announcement.

Apparently, investors didn't get the memo. On the day of the announcement, NetApp closed at $17.34. Yesterday, shares closed at $20.69. Since the beginning of the year, NetApp is changing hands up nearly 50%.

So, what gives? Cramer said on last night's "Mad Money" that investors simply like the deal and see it as a big win for NetApp. The company is now poised to move from bit-player to big-player status in the data storage sector. The move may also help take care of NetApp's problem with slipping margins.

Ashok Kumar, an analyst with Collins Stewart, upgraded NetApp from sell to hold following the announcement, saying that the merger would heighten NetApp's competitiveness in the data storage sector.

"The company is only likely to match the growth rate of the industry going forward," Kumar wrote in a note, according to the Associated Press. "While the stock briefly hit our sell price target of $13, it is unlikely to revisit those levels as ongoing takeout rumors will provide a valuation backstop."