NetApp Inc. (NTAP): Is This Stock a Good Buy Now?

Hewlett-Packard and its bad acquisition

Hewlett-Packard Company (NYSE:HPQ) has been quite famous for its “due diligence” practice when it wrote off as much as $8.8 billion from its $11 billion acquisition of Automony. In the $8.8 billion impairment charges, about $5 billion was due to accounting misrepresentation. Recently, Hewlett-Packard’s shareholders sued the company because of its Autonomy acquisition.

According to Bloomberg, Autonomy had purchased goods from its customers and pursued aggressive revenue recognition practices, which were called “round trip transactions.” Even with the huge write-down, its goodwill and intangible assets were still quite large at more than $35.2 billion, accounting for more than 40% of its total assets. The large goodwill and intangible assets are quite vulnerable to future impairment, which could negatively impact the company’s share price.

My Foolish take

NetApp Inc. (NASDAQ:NTAP) seems to be a good stock to purchase at its current trading price due to its market leading position, strong balance sheet, and little goodwill and intangible assets. Moreover, with the involvement of Paul Singer, NetApp’s hidden value could be unlocked in the near future and/or the company might be a potential buyout target for the larger IT firms.

Anh HOANG has no position in any stocks mentioned. The Motley Fool owns shares of EMC.

The article Is This Stock a Good Buy Now? originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.