Update: Credit Suisse Cuts Network Appliance Rating, Merrill Maintains Buy

Updated from 11:30 a.m. ET

Shares of Network Appliance(NTAP Quote) took a tumble after Credit Suisse First Boston downgraded the company to hold from buy, citing tougher competition in the face of a slowdown in technology spending.

Network Appliance recently plummeted $7.25, or 13.5%, to $46.38 in trading on the Nasdaq. The 52-week low is $41.13, and the high for the year is $152.75.

Amit Chopra is just one more analyst who seems concerned about Network Applicance's valuation and the storage sector at large. Last week, Network Appliance was hit hard after Goldman Sachs and Salomon Smith Barney cut their ratings on the company amid worries about the firm's market and valuation.

Responding to the downgrade, Merrill Lynch analyst Tom Kraemer reiterated his buy rating on Network Appliance and said he remains "comfortable" with his estimates, given that "storage demand is solid."

"Recent checks that we have done with component suppliers show that demand, at least from a unit perspective, appears fine and we haven't heard much of an issue in terms of pricing," Kraemer said in his brief note. He expects the company to earn 41 cents a share in 2001, compared with 21 cents a share in 2000.

Today, Network Appliance said it signed a deal with European Web-hosting and e-business software provider Integra to support its deployment of more than 20,000 interconnected servers in Europe by the end of 2004. The company didn't disclose any financial terms of the deal.