Why did NTAP stock buybacks slow to $100 million in Q3/4 vs $300 and $400 million in Q1 and Q2 FY24?
CFO missed the 100% of FCF targeted returns to shareholders via buybacks and dividends. $900 million buybacks and $425 million dividends vs $1.5B FCF.
There was still $500 million remaining on old authorization and they added $1B.
CFO also said NTAP can operate with $1B of gross cash on balance sheet. They have $400 million due in Sept and cash dividends will actually be less than FY24 because share count has been reduced. To that end, NTAP has 3.1B gross cash now, will generate 1.5B in FY25 and can spend $1.5B of NetApp cash on buybacks.
This will help acquirer as NTAP can reduce share count by another 20 million assuming $200 stock price if that is near where deal price is.
PSTG currently trades 38x FY25 adjusted earnings while NTAP at 14x ($6.5B revs * 27% margin). 28-30x adj earnings seems like reasonable valuation if NTAP acquired (buyer will also realize significant synergies).
Time will tell.