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TheStreet Open House

NetApp Didn't Need Data Domain Anyway

EMC (EMC) has added a key weapon to its arsenal by winning the battle to acquire Data Domain (DDUP), but rival NetApp (NTAP) still has plenty of options to boost its own strategy.

NetApp withdrew its $1.9 billion cash and stock bid for Data Domain late Wednesday, just two days after EMC threw down a $2.1 billion all-cash offer.

Santa Clara, Calif.-based Data Domain is regarded as a trailblazer in data de-duplication, which ensures that the same pieces of information are not stored by companies. By eliminating duplicate data, the technology is seen as the solution to the current data explosion, making Data Domain an attractive target for both EMC and NetApp.

Despite losing out on what could be a crucial piece of intellectual property, NetApp's shares rose 60 cents, or 3.26%, to $18.99 Thursday, outpacing the broader advance in tech stocks that saw the Nasdaq rise 0.60%.

The firm's share price could be climbing for any number of reasons, including investors' relief that NetApp has walked away from an expensive bidding war with cash-rich EMC.

"We agree with NetApp's management that it is in the best interests of shareholders to end the bidding war at this point," wrote Kaushik Roy, an analyst at Wedbush Morgan, in a note released Thursday. "While Data Domain (at a reasonable price) would have been a great strategic acquisition, we believe NetApp has other choices."

These include enhancing the firm's existing de-duplication products, or maybe looking elsewhere for the technology, according to the analyst. Possible targets could be backup software specialist CommVault (CVLT) or Virtual Tape Library (VTL) firm FalconStor (FALC), he added.

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