Today: SanDisk completes its enterprise acquisition spree with $1.1 billion purchase of Fusion-IO, and analyst says Milpitas company got "a steal." Also: Tesla has its best day on Wall Street in months after report of collaboration with Nissan and BMW.

The Lead: SanDisk agrees to $1.1B purchase of Fusion-IO

SanDisk's three-year campaign to transform into an enterprise powerhouse reached its peak Monday, when the flash memory maker acquired downtrodden Fusion-IO for $1.1 billion in cash.

The deal, which values Fusion-IO at $11.25 a share, gives SanDisk a more substantial foothold in the growing business of storage in data centers, with big Silicon Valley customers: Apple, Facebook and Hewlett-Packard accounted for more than 60 percent of Fusion-IO's sales of storage hardware and software in its most recent fiscal year.

With its fifth enterprise-focused acquisition since 2011, the Milpitas company known for selling memory cards to consumers and gadget manufacturers is officially "a one-stop shop" for enterprise customers as well, CEO Sanjay Mehrotra said Monday, which he believes will boost the company and demand for its products.


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"I believe it will make the market grow faster and certainly accelerate SanDisk's leadership position in enterprise storage." Mehrotra said in an interview with this newspaper.

Fusion-IO was a hot property when it went public in 2011 for $19 a share, eventually topping $40 at the end of that year as the Salt Lake City company's products that run flash-centric storage began finding fans. Instability and waning sales have damaged the company's reputation, however: Fusion-IO is on its third CEO in five years after sending out co-founder David Flynn in 2013, and revenues declined 13.8 percent year-over-year in the last nine months.

Srini Nandury, Summit Research Partners managing director, contended Monday that Fusion-IO's recent struggles created a great opportunity for SanDisk, which he said "got a steal" with the purchase at an enterprise value barely more than double expected future sales.

"All around, the company is spectacularly mismanaged, but there's nothing else wrong there -- they've got good products, good technology and SanDisk is going to be a beneficiary of that," Nandury said in a Monday interview.

Nandury pointed out that HP valued Fremont's 3Par at nearly 10 times its future sales in a $2.4 billion 2010 acquisition, and said that SanDisk's price may have to increase if NetApp or another suitor jumps in. Wall Street seemed to agree: Fusion-IO's stock price ended higher than the acquisition price Monday, closing at $11.36 after moving as high as $11.45.

SanDisk executives downplayed Fusion-IO's recent travails and described a bright future. Fusion-IO had recently begun to pivot from selling directly to customers to working with original equipment manufacturers, or OEMs, much as SanDisk does in selling flash memory to device makers such as Apple and Samsung.

"We do business with six of the top seven OEMs and have a growing business with that customer base, so already that is a strength to us that Fusion-IO is trying to get to," said SanDisk Chief Strategy Officer Sumit Sadana, whom Mehrotra called "the architect of this acquisition."

SanDisk plans to integrate Fusion-IO employees into its own structure, with Chief Operating Officer Lance Smith taking over responsibilities for market and research and development and reporting to Mehrotra. SanDisk declined to offer specifics on the fate of other executives, including Apple co-founder Steve Wozniak, Fusion-IO's chief scientist. Wozniak also declined to comment when reached by email.

SanDisk has already begun reaping the rewards of its enterprise push, growing sales by more than $1 billion in 2013 to top $6 billion in annual revenues for the first time, while profits ballooned by 150 percent. Mehrotra said that SanDisk previously expected to top $1 billion in enterprise revenues for the first time in 2016, but believes the Fusion-IO acquisition moves that forecast up to 2015.

SanDisk's recent performance has helped its stock reach progressively higher record prices for months, a pattern that continued Monday with new all-time highs and a 3.6 percent increase to $102.

The boards of both companies have approved the deal, which SanDisk expects to close by the end of September.

SV150 market report: Tesla drives Wall Street to gains

Wall Street gained Monday as Tesla Motors rode reports about possible cooperation with rivals to its best day on Wall Street in months.

After offering to let other companies share in its Supercharger technology and opening up its patent cache to competitors last week, Tesla is on the road to working with BMW and Nissan on electric-vehicle technology, the Financial Times reported Monday morning. "It is obviously clear that everyone would benefit if there was a far more simple way for everyone to charge their cars," an unnamed automotive executive told the newspaper. Palo Alto-based Tesla also provided a sneak peek at its next new car, the Model X, sending customers on the waiting list for the SUV-style electric automobile an update on the car's features ahead of its early 2015 release. Tesla's stock jumped 8.8 percent to $224.61, the carmaker's best single-day performance since February.

Silicon Valley's other cleantech companies also enjoyed Monday's session on Wall Street: San Jose solar manufacturer SunPower increased 8.1 percent to $38.56, San Mateo solar installer SolarCity gained 4.6 percent to $54.88, and "smart grid" networking company Silver Spring added 2 percent to close at $13.52. Apple moved 1.1 percent higher to $92.20 amid a range of opinions about CEO Tim Cook's performance, with UBS analyst Steve Milunovich decidedly coming down on Cook's good side, writing, "Cook-doubters will be proven wrong" Yahoo dropped 5.8 percent after Asian investment Alibaba admitted that sales growth has slowed recently and detailed its odd corporate governance structure.

Up: Tesla, SunPower, SolarCity, AMD, SanDisk, Twitter, Workday, Juniper, Adobe, Apple

Down: Yahoo, Yelp, Google, LinkedIn, HP, Cisco, Zynga, Symantec, Facebook, Nvidia

The SV150 index of Silicon Valley's largest tech companies: Up 3.44, or 0.23 percent, to 1,488.06

The tech-heavy Nasdaq composite index: Up 10.45, or 0.24 percent, to 4,321.11

The blue chip Dow Jones industrial average: Up 5.27, or 0.03 percent, to 16,781.01

And the widely watched Standard & Poor's 500 index: Up 1.62, or 0.08 percent, to 1,937.78

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