Elliott Management Corp. took a significant stake in NetApp Inc., pressing the data-storage company to change its board and study options to boost shareholder value, people familiar with the situation said.

NetApp shares rose as much as 8.1 percent. Elliott, the hedge-fund firm founded by billionaire Paul Singer, has been in talks with NetApp for weeks over its proposals, including a return of cash to shareholders, said one of the people, who asked not to be identified because the talks are private.

Elliott has a stake of less than 5 percent and it has proposed a slate of new directors for Sunnyvale, California- based NetApp, the person said. NetApp has been viewed as a takeover target for about a decade, with Oracle Corp. and Cisco Systems Inc. cited as potential buyers. While NetApp is positioned to benefit as businesses store and manage data on the Web, the company’s technology hasn’t kept up with larger rivals.

“NetApp is under attack from a lot of new technologies and ideas,” said Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco, who has a neutral rating on the stock with a price target of $34.

The stock rose as high as $39.15, its highest price since November, before closing at $38.46.

Elliott may also increase its stake, said the person.

Representatives for Elliott and NetApp declined to comment.

Cash Position

NetApp has too much cash and can return more to shareholders, according to Brian Alexander, an analyst at Raymond James & Associates Inc.

“Even after retiring the $1.2 billion convertible note due in June, they still have plenty of liquidity,” said Alexander, who rates the stock outperform with a price target of $40 a share. “A takeover is less likely because their technology is not well positioned for where the future in storage will occur, such as big data and cloud computing.”

By the end of April, NetApp had $7 billion of cash, of which half is in the U.S., according to an estimate by Alexander.

Before rising on the news of Elliott’s investment today, NetApp shares had declined 33 percent in the past two years wiping out $6.8 billion in market value, according to data compiled by Bloomberg. During the same period, the Standard & Poor’s 500 Information Technology Index increased 19 percent.

“They’re not paying a dividend, buying back stock aggressively or doing strategic M&A,” said Noland. “They need to pick a path” to return some cash to shareholders, he said.

Technology Deals

NetApp’s market capitalization, which peaked at almost $47 billion in 2000 at the height of the dot-com bubble, was $13.1 billion yesterday.

In November, NetApp’s enterprise value fell to 5.7 times its earnings before interest, taxes, depreciation and amortization, a four-year low, data compiled by Bloomberg show. The company’s Ebitda multiple as of yesterday was 8.9 times.

NetApp is releasing its fourth-quarter earnings for the period ending April 26 on May 21.

Elliott, based in New York, has a history of pressing technology companies to make deals. The firm lobbied BMC Software Inc. last year to consider a sale, a goal realized earlier this month with the announcement of the company’s $6.9 billion takeover by Bain Capital LLC, Golden Gate Capital and other firms. Elliott also has pressed for change at Compuware Corp., offering to buy the business-software maker for $2.3 billion in December.

Storage Challenges

Elliott’s pressure comes at a time when new technologies threaten NetApp, which has recently completed an overhaul of its operating system for its storage computers, called OnTap.

While NetApp has specialized in systems that use disk drives, the hardware maker has yet to start selling products based on higher-performance electronic “flash” storage.

Longtime NetApp executives such as Dan Warmenhoven, Tom Mendoza and co-founder Dave Hitz should stay on the board, said Noland.

“They’re the lifeblood history of NetApp,” he said. “I would want them around, but I’d want fresh ideas as well.”