International Business Machine Machines Corp.'s (IBM) bid for Netezza Corp. (NZ) again shined the spotlight on the data-storage and warehousing sectors, with more deals anticipated.

Demand for data storage is expected to continue to grow as virtualization and cloud computing become more widespread and people generate more information. But the number of companies who provide the needed storage--as well as ability to manage the documents--is limited, and their stock prices have soared in recent weeks.

The storage companies getting the most investor focus over the past month include Compellent Technologies Inc. (CML), CommVault Systems Inc. (CVLT) and Isilon Systems Inc. (ISLN). Teradata Corp. (TDC), one of Netezza's competitors in data warehousing, saw its shares get the biggest boost Monday.

Teradata and Isilon declined to comment, while representatives from Compellent and CommVault didn't respond to requests for comment.

IBM's $1.7 billion bid for Netezza, which provides technology that allows companies and government agencies to quickly analyze huge amounts of data, marks the second large takeover bid in the storage space in a month. Hewlett-Packard Co. (HPQ) recently defeated Dell Inc. (DELL) in a public bidding war for data-storage company 3Par Inc. (PAR), vying to get access to the high-end storage market.

The recent M&A in the sector highlights the need for tech giants to expand in the fast-growing field of data storage and management. The market has been growing quickly as companies and governments use more space to hold the billions of emails, customer orders and other vital information needed to run their operations.

"Many larger companies are not innovators, and they're looking for growth right now," ThinkEquity analyst Rajesh Ghai said, adding that the number of potential targets is dwindling. "But I don't think every storage company will get acquired."

Forrester Research analyst Jim Kobielus said Teradata has an "extensive" set of partnerships and its technology is widely adopted by Fortune 500 companies. He said H-P might be interested in buying the company to boost its data-warehousing offerings, though H-P has made pricey acquisitions in the past month.

Other potential acquirers include data-storage companies EMC Corp. (EMC), as well as big technology companies like Oracle Corp. (ORCL), Cisco Systems Inc. (CSCO) and Dell.

Shares of Compellent and CommVault have soared about 50% since Dell's initial offer for 3Par, while Isilon has jumped nearly 60%. Netezza shares had shot up 77% before IBM's offer Monday. Compellent recently was up 1.7% to $18.15, CommVault was 3.7% higher at $28.01 and Isilon increased 1.2% to $25.37.

Teradata, meanwhile, had climbed only 16% before IBM's offer for Netezza. Its shares got the biggest boost from the news Monday, recently up 8% to $37.21.

Noble Financial analyst Gary Spivak said acquisition speculation has been built into many of the valuations and the stocks likely don't have much higher to go.

"I think they're pretty close to the ninth inning of their takeover speculation valuation," Spivak said, adding that there aren't many bargains left.

Meanwhile, Steve Gerbel, head of merger arbitrage hedge fund Chicago Capital Management, said it's hard to determine fair value for the recent spate of acquisitions in the tech sector.

"We're getting these transactions that are impossible to value using historic methods because of the growth that's there," Gerbel said. "There has been a dearth of mergers for so long, there really weren't comps people could go and easily pick out."

-By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com
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