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UPDATE: Trading Tech Amid M&A Takeout Frenzy

Monday, 20 Sep 2010 | 5:47 PM ET

M&A dominated headlines on Monday again with the Street digesting the latest big tech takeover.

This time, IBM inked a deal to buy data analytics company Netezza for $27 per share, almost a 10% premium from Friday's closing price of $24.60.

In the wake of the news, rivals CommVault and Teradata traded at or near 52-week highs.

Considering the bidding war that erupted recently over 3PAR , what’s the tech trade, now?

Instant Insights with the Fast Money traders

As far as I’m concerned the question becomes, ‘what does Dell do now,” muses Joe Terranova. (Remember, Dell lost the bidding war for 3PAR to HP .)

The fact that Netezza is trading above $27 suggests at least some investors believe there could be another buyer. Cisco, HP, and now IBM have all made major purchases. I’d think Dell has to come out and do something.

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Roth Capital analyst Nathan Schneiderman also thinks there could be higher bids for Netazza - potentially from Hewlett Packard, despite the company's other acquisitions, reminds host Melissa Lee.

If you’re looking for a trade, long-term I still like HP, says Patty Edwards, however if they step in and bid for Netazza, I’d be concerned about what that does to share price in the short-term.

Options action does not suggest a higher bid is coming, adds Pete Najarian.

If you're looking for the next deal, enterprise storage is clearly a hot growth market, says Brian Marshall of Gleacher and I think Isilon is the next to go.

M&A Tech Trade
The security sector heats up, with Brian Marshall, Gleacher.

And I think the likely acquirier is probably EMC . However the premium is probably already built into the stock, he adds.

Also a deal between Cisco and EMC makes complete sense, he says. And so does a deal between IBM and NetApp.

However, broadly it's very difficult to buy stocks on takeover speculation, he cautions.

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Looking elsewhere in tech, Google hit a new 52-week high on Monday and Apple is approaching that level as well, adds host Melissa Lee.

I’m seeing clients step into big cap tech, says Steve Grasso, but it seems the only want marquis names in this space.

Apple broke $280, adds Tim Seymour, that's significant.


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Trader disclosure: On Sept. 20th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (GOOG), (MOS), POT); Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (MA), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SU), (SPLS), (RIG), (UPL), (VRTS); Finerman & Finerman’s firm owns (BBY); Finerman’s firm owns (DAN); Finerman owns (GOOG); Finerman’s firm owns (HPQ); Finerman’s firm owns (IBM); Finerman’s firm owns (POT) and calls; Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Pete Najarian owns (NTAP) call spreads; Pete Najarian owns (POT) call spreads; Pete Najarian owns (RAX) call spreads; Pete Najarian owns (YHOO) ; Pete Najarian owns (GDXJ); Pete Najarian owns (DD); Pete Najarian owns (CNI); Pete Najarian owns (AKAM) call spread; Pete Najarian owns (DCSI) call spread

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
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Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)

For Patty Edwards
Edwards owns (AAPL) for clients
Edwards owns (AMZN) for clients
Edwards owns (CSCO) for clients
Edwards owns (EMC) for clients
Edwards owns (FCX) for clients
Edwards owns (GOOG) for clients
Edwards owns (HPQ) for clients
Edwards owns (IBM) for clients
Edwards owns (NRG) for clients
Edwards owns (ORCL) for clients
Edwards owns (SYT) for clients

For Daniel Clifton
***No Disclosures***

For Dennis Gartman
***No Disclosures***

For Brian Nagel
Oppenheimer & Co. Inc. makes a market in the securities of (AAPL), (RIMM)

For Gary Shilling
Funds managed by Shilling own U.S. Treasuries

For Brian Marshall
***No Disclosures***

For Ed Mills
***No Disclosures***

For Mike Khouw
Cantor Fitzgerald makes a market in (X)

CNBC.com with wires.

  Price   Change %Change
CSCO
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CVLT
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4331
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EMC
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HPQ
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IBM
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NTAP
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PAR
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TDC
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AAPL
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GOOGL
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