A shift in sales from mature technologies to more strategic technologies is laying the groundwork for an improved future for NetApp, but the company in the meantime is still dealing with slowing revenue and earnings growth, the company's CEO reported.
NetApp plans to provide a glimpse of that future as the company prepares for the June unveiling of a new version of its Ontap operating system and new solutions based on its SolidFire acquisition, said NetApp CEO George Kurian during the company's 2016 fiscal fourth quarter financial analyst call.
"We are very confident about our strategic solutions. … We are looking forward over fiscal year 2017 to having growth in strategic solutions offset mature solutions," Kurian said.
For the fourth quarter, which ended April 29, NetApp reported revenue of $1.38 billion, down about 10 percent from the $1.54 billion the company reported in the fourth fiscal quarter of 2015.
The company also reported a GAAP loss in the quarter of $8 million, or 3 cents per share, which was significantly down from the $135 million, or 43 cents per share, it reported the year before. On a non-GAAP basis, NetApp reported income in the fourth fiscal quarter of $157 million, or 55 cents per share, down from last year's $202 million, or 65 cents per share. Analysts had been expecting non-GAAP earnings of 58 cents per share.
For all of fiscal 2016, NetApp reported revenue of $5.55 billion, down about 9 percent from last year's reported $6.12 billion.
The company reported GAAP earnings for the full year of $229 million, or 77 cents per share, which was less than half the previous year's earnings of $560 million, or $1.75 cents per share. Non-GAAP earnings for the year were $633 million, or $2.13 per share, compared with last year's $865 million, or $2.70 per share.
About 43 percent of NetApp's revenue comes from commercial business in the Americas, while the U.S. public sector accounts for 12 percent. About 77 percent of total sales over the past year came from indirect sales channels.
Investors had been hoping for better news from NetApp, and caused shares to rise about 1.3 percent by the close of the trading day Wednesday. However, after the results were released, investors in after-hours trading drove shares down about 7 percent after a number of wild swings in share prices.
Kurian said during his prepared remarks that customers are being cautious because of macroeconomic issues, and are increasingly moving their data to the cloud.