NetApp acquires storage firm

The Wall Street Journal.

NetApp says it will acquire Engenio, a storage-systems business of LSI, for $480 million, making the deal the largest acquisition in NetApp's history.

And while several data-storage industry analysts say the deal is likely a smart one for NetApp, negative investor reaction knocked as much as 8% off of NetApp's shares on Wednesday, adding to a decline over the past month that has shaved off a large piece of the company's recent stock gains.

According to Bloomberg Businessweek, NetApp says the Engenio purchase will help it build networks for companies that operate memory-heavy applications like full-motion video capture, digital video surveillance and gene sequencing.

The market for those applications will be worth $5 billion by 2014, according to NetApp.

NetApp CEO Tom Georgens says Engenio gives the company reach into markets it doesn't cover. NetApp will integrate Engenio into its operations, keep engineers and combine sales teams, states ZDnet.

Reuters says the popularity of online video and the switch to digital data in various businesses are generating huge amounts of online traffic. This is boosting demand for effective storage products and cloud computing by accessing remote computing power and data over the Internet.