NetApp Layoffs, Positive Analyst Report Prompt Stock Increase

By Joseph F. Kovar, CRN
February 09, 2009 7:40 PM ET

NetApp laid off several hundred employees Monday, which, along with positive earnings previews from analysts, helped the company's stock rise in anticipation of its earnings report, scheduled for Wednesday.

NetApp on Monday said it is reducing its head count by about 6 percent because of the economic downturn. NetApp currently has more than 8,000 employees, according to the company's Web site.

Responding to a request from Channelweb.com for information on the layoffs, Jodi Baumann, director of corporate public relations at the storage vendor, replied in an e-mail, "Today, NetApp took a number of steps to better align our resources with the business outlook. This restructuring includes a reduction of about 6 percent of the global workforce, as well as the reallocation of other resources to initiatives designed to increase operating efficiency and build a foundation for additional market share gains."

When asked for further information, Baumann wrote, "We do not for competitive reasons disclose specific group or organization head count plans."

NetApp, which on Wednesday is scheduled to present its financial report for the third fiscal quarter of 2009, got a pre-report boost in its stock price, which increased 16 cents per share Monday to $16.30, from a number of analyst reports.

Jayson Noland, an analyst with Robert W. Baird & Co., a financial analyst firm, wrote in a research report on Monday that an informal survey of 18 NetApp solution providers during the prior week found that NetApp is doing well in the market.

About two-thirds of the solution providers surveyed were on or above plans for NetApp business for the quarter that ended in January, and were expecting their pipelines to be "OK" relative to very tough macro-economic conditions, Noland wrote.

About 67 percent of NetApp's revenue in its fiscal second quarter came through the channel, Noland wrote.

Meanwhile, a report from Barron's on Monday said NetApp is expected to see revenue growth of between 10 percent and 15 percent in 2009, and as high as 20 percent in 2010, thanks to the strength of the storage market relative to the rest of the IT market.

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