Investors Pummel NetApp Over 2013 Guidance, But Channel Does NetApp Well


NetApp on Wednesday reported strong revenue growth of 22 percent in fiscal year 2012 thanks to the strength of its unified storage business.

Unfortunately, the storage vendor's bright yearly revenue figure was overshadowed by a fall in income over 2011 and a relatively dim outlook for the first quarter of fiscal 2013. That outlook, stemming primarily from uncertainty in U.S. government and in overall European spending, caused NetApp investors to dump shares in the company in after-hours trading.

However, NetApp cannot blame the channel for its outlook. Indirect sales accounted for 79 percent of the company's overall revenue, a record level for NetApp.

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NetApp said that its revenue for fiscal year 2012, which ended April 27, reached $6.2 billion, up 22 percent compared to the $5.1 billion the company reported for its fiscal year 2011.

Income, however, could not keep up with the revenue rise. NetApp reported 2012 income of $605 million, or $1.58 per share, a 10-percent drop from the $673 million, or $1.71 per share in 2011.

For its fourth fiscal quarter of 2012, NetApp reported revenue of $1.7 billion, up 19 percent compared to the $1.4 billion it reported during the same period last year. Income for the quarter was $181 million, or 47 cents per share, up from the $161 million, or 40 cents per share, the company reported last year.

The channel continues to do extremely well for NetApp.

Tom Georgens, NetApp president and CEO, said during the company's Wednesday financial analyst call that channel partners accounted for 79 percent of revenue in the fourth quarter compared to 75 percent in the year-ago period.

NetApp's distributors, Arrow and Avnet, together accounted for 31 percent of the company's overall revenue in the quarter, Georgens said. Arrow in fiscal year 2013 actually breached the $1 billion mark in sales of NetApp products, he said.

NetApp also had its highest number of $5 million-plus deals ever in a quarter during the fourth quarter, he said.

Julie Parrish, senior vice president of global partner sales at NetApp, told CRN after the conference call that NetApp's channel growth comes from customer adoption of its technology.

NEXT: Channel Sales Continue To Dominate And Grow For NetApp