Wall Street: M&A, good forecasts make news

Acquisitions on the part of NetApp and IDT, plus a spate of relatively healthy IT spending forecasts gave investors food for thought this week.

Acquisitions on the part of Network Appliance (NetApp) and Integrated Device Technology (IDT), plus a spate of relatively healthy IT spending forecasts gave investors food for thought in the tech market this week.

IT market research company IDC and investment brokers Lehman Brothers and Smith Barney all came out with good news for the IT market this week. Thursday, IDC raised its forecast for growth in global PC sales to 11.4 percent, up from its prior forecast, which was for growth of 9.7 percent. The increase is due to strong demand for portable computers and growth in emerging markets in regions including Latin America and Africa. For similar reasons, Smith Barney said Wednesday that it expects worldwide PC sales to be 9 percent for the year, up from its earlier forecast of 7 percent.

For its part, Lehman Brothers Tuesday also delivered some good news: It forecast that, after getting off to a hesitant start this year, corporate IT spending will grow 5 percent to 6 percent. Lehman said that in storage, specifically, spending would increase 7 percent, and forecast that EMC and Hewlett-Packard would gain share in this market.

Shares of HP (ticker symbol: HPQ), however, dropped Tuesday by US$0.07 to US$23.82, after the company announced an about-face regarding its PC and printer units. Five months after merging the units under former Chief Executive Officer Carly Fiorina, the company is now splitting them up again. Despite the share price drop, some analysts seemed to like the idea, saying that it would make company sales easier to analyze.

On the mergers and acquisitions front, IDT said Thursday it will buy Integrated Circuit Systems for approximately US$1.7 billion in cash and stock. The processor makers both have specialty timing chips aimed at communications and consumer electronic products. IDT has for some time been branching out from its base in the memory market. Investors, however, dumped IDT shares on the news. IDT (IDTI) shares closed down by US$1.02, finishing the day at US$11.51.

In the storage arena, NetApp Thursday said it plans to acquire privately held data security company Decru for US$272 million in cash and stock. NetApp said that the buy will help bolster its competitiveness against EMC, HP and IBM. Company executives also noted that NetApp has been branching out from pure storage systems, getting into the data security area, for several years now. This acquisition was treated better by traders, as NetApp (NTAP) closed Thursday at US$30.02, up US$0.22 for the day.