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

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For instance, NetApp in the fourth quarter had a 6-percent year-over-year growth in storage product revenue, not including the company's E-series of products, which are primarily sold by OEM partners, Parrish said. This compares to a 3 percent growth by EMC and a drop of 8 percent by Dell.

In addition, Parrish said, sales of NetApp's 2000-series midrange storage systems rose 23 percent year-over-year, while sales of its enterprise-class 6000 series nearly doubled during the same time. The bulk of those sales are through the channel.

NetApp's channel partner count has remained at about 6,000, with a small amount of recruiting going on, she said.

She contrasted NetApp's partner consistency to that of arch-rival EMC, which this week unveiled several measures aimed at taking more of its business to partners.

"What's feeding our channel growth?" Parrish rhetorically asked. "Us handing partners more deals? No. It's our technology and the customers' adopting of our technology through the partners."

Parrish said that NetApp's partners are leading the market in helping customers adopt proven server and storage architectures with the FlexPod converged infrastructure offering from NetApp and server and networking partner Cisco.

There are currently 850 FlexPod customers around the world, up 400 percent compared to last year, Parrish said. Customers, working exclusively through solution providers, are now purchasing two FlexPods per day, she said.

Parrish admitted that, while many FlexPod sales would have been NetApp sales anyway if they hadn't be part of a converged infrastructure sale with Cisco, growth in FlexPod sales prove the power of a proven architecture in the minds of customers.

"This shows the adoption of fully vetted architectures is growing," she said. "And it shows we're heading in a direction customers care about."

Looking forward, for the first quarter of fiscal 2013, NetApp estimates revenue will be $1.4 billion to $1.5 billion, which is somewhere between a 4-percent drop and a 3-percent rise over its reported first fiscal quarter 2013 of $1.46 billion.

The company on Wednesday also said it expects first fiscal quarter earnings per share of between 10 cents and 15 cents, significantly down from the 34 cents per share it reported last year.

That pessimistic outlook, and the fact that NetApp declined to give full year 2013 guidance, resulted from increasingly uncertain economic issues, said Nick Noviello, executive vice president of finance and CFO at NetApp.

"(We're showing) conservatism due to the macroeconomic situation," Noviello said.

NEXT: Challenges Across The Storage Industry

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