Channel Pushes NetApp To Huge Sales, Earnings Gains

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NetApp finished its fourth fiscal quarter of 2010 off with a bang, posting a huge growth in sales and profit to cap off a year which saw the channel portion of its business continue to expand.

Indirect channel sales accounted for 71 percent of sales during the quarter, a proportion which has never been higher and which is expected to only grow into the future, the storage vendor said.

NetApp reported total sales of $1.2 billion for its fourth fiscal quarter of 2010, which ended April 30. That was up 33.2 percent compared to the same quarter of 2009.

Income during the quarter did even better. The company reported income of $141.5 million, up 112 percent over the $68.4 million reported during the same quarter last year.

For all of fiscal 2010, sales were $3.9 billion, up 15.4 percent over the $3.4 billion reported for 2009. NetApp reported income for the entire year of $400.4 million, or over five times that of the $64.6 million it reported a year ago.

For the fourth quarter, NetApp’s hardware revenue grew 49.9 percent over last year, while its software entitlements and maintenance revenue grew 5.6 percent and its services revenue grew 14.2 percent.

Tom Georgens, president and CEO of NetApp, said an indirect sales channel push and a recovery in technology spending combined to drive the company’s strong growth in sales and profit.

About 71 percent of NetApp’s sales during the fourth quarter went through indirect channel sales, Georgens said. “That number has been inching up and inching up,” he said. “And I expect it will continue to do so.”

Sales of NetApp products through its two primary distributors Avnet and Arrow hit a new record at about $1 billion, which was up significantly over last year, Georgens said.

NetApp’s direct sales business also grew in terms of absolute dollars, but not as much as its indirect sales, Georgens said.

“A few years back, we made the decision to work more with the channel,” he said. “We changed how partners make orders, and added bundles. This (record) isn’t all about products. It’s about focus.”


Next: Making The Channel Work For NetApp

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