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RBC Capital Downgrades Network Appliance


RBC Capital downgrades Network Appliance (NTAP) to sector perform from outperform.

Analyst Thomas Curlin says with Cisco's recent acquisition of Actona (offers network attached storage extension technology), Cisco must acquire appropriate network attached storage (NAS) technology or partner with an existing market player such as Network Appliance or EMC. He thinks an EMC partnership is the likely scenario.

Thus, he feels Network Appliance's current valuation is vulnerable to an EMC/Cisco partnership in NAS. He believes prospects for a united Cisco/EMC attack calls into question the prudence of paying for 2009 revenue targets in 2005.

Curlin cuts Network Appliance's target to $28, or 35 times his 72 cents fiscal 2006 earnings per share estimate plus $2.44 net cash.


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