NetApp Misses Q1 Expectations Despite Record Enterprise Sales


Storage vendor NetApp on Wednesday reported strong revenue growth but a steep drop in earnings for its first quarter of fiscal 2012, along with expected continued growth in the second quarter.

However, the company's inability to meet analysts' expectations, along with the expected resignation of Executive Vice President and CFO Steve Gomo, influenced investors', who drove the company's share price lower in after-hours trading.

NetApp executives attributed the revenue growth to record sales of the company's FAS6000 series of storage appliances and near-record numbers of new enterprise customer wins.

NetApp reported revenue for its first fiscal quarter 2012, which ended July 29, of $1.46 billion, up about 27 percent compared to the $1.15 billion the company reported for the same period last year.

NetApp also reported earnings of $139.5 million, or 34 cents per share, which was down 7 percent from the $150.7 million, or 40 cents per share, it reported last year.

Non-GAAP earnings for the quarter were $222.3 million, or 55 cents per share, compared to $190.9 million, or 51 cents per share, last year.

Analysts had been expecting revenue for the quarter of $1.51 billion and earnings of non-GAAP earnings of 55 cents per share, according to Barrons.

NetApp also said that it expects revenue for its second quarter to be between $1.5 billion and $1.6 billion, or up 20 percent to 28 percent compared to the second quarter of last year. GAAP earnings per share is expected to range between 38 cents and 42 cents, compared to 42 cents per share last year. Non-GAAP earnings per share is expected to be about 58 cents to 62 cents, compared to last year's 52 cents per share.

Analysts had been expecting revenue of $1.61 billion and non-GAAP earnings of 60 cents per share, Barrons wrote.

NetApp's product revenue for the first quarter reached $965.7 million, up 31 percent over last year's $737.5 million. Software entitlement and maintenance revenue was $198.2 million, up 14 percent from $174.2 million last year. Service revenue reached $294.3 million compared to last year's $242.0 million.

Along with the company's first fiscal quarter 2012 financials, NetApp also said on Wednesday that Steve Gomo, its long-serving executive vice president and CFO, plans to retire on December 31 after nine years with the company.

Nicholas R. Noviello, NetApp's senior vice president of finance and global controller, is slated to succeed Gomo as CFO on January 1.

Investors were disappointed at NetApp's first quarter finances and the executive transition, and showed their displeasure in the first 90 minutes after-hours trading by driving NetApp's share price down by about 14 percent.