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NetApp Plans Layoffs Of 12 Percent Of Its Global Workforce

Joseph F. Kovar
George Kurian

NetApp on Wednesday said it is laying off 12 percent of its global workforce as it shifts its focus from mature technologies to the faster-growing all-flash storage and Clustered Data Ontap parts of its business.

The Sunnyvale, Calif.-based storage vendor unveiled the layoffs Wednesday as part of its third fiscal quarter 2016 financial analyst report.

The company reported fiscal third-quarter revenue of $1.39 billion, down from $1.55 billion in the third quarter of fiscal 2015.

[Related: Q&A: Pure Storage CEO Dietzen Talks About NetApp/SolidFire, Flash Storage Future]

Income on a GAAP basis during the quarter reached $153 million, or 52 cents per share, down from last year's $177 million, or 56 cents per share. On a non-GAAP basis, income in the third fiscal quarter was $206 million, or 70 cents per share, compared to last year's $238 million, or 75 cents per share.

As part of its quarterly report, NetApp wrote that it has "initiated [a] transformation program to reduce [the] cost structure of the company."

NetApp CEO George Kurian told CRN in an interview that the coming layoffs will be on a global basis and related to investing in increasing the efficiency and effectiveness of the company, based on benchmarks the company has set relative to other leading companies in the industry.

"It involves all aspects of our P&L, both cost of goods, the operating expense stack, indirect spending, and working capital and balance sheet items," Kurian said. "So it's a pretty comprehensive program we've undertaken."

The first step in the transformation will be a 12-percent global reduction in NetApp's workforce, Kurian said.

The workforce reduction reflects NetApp's move to re-align resources with the biggest opportunities, particularly in the vendor's all-flash storage array and Clustered Data OnTap businesses.

"Certainly, as part of our acquisition of SolidFire, we bring on new capabilities into the company," Kurian said. "And as a result, we are also taking action on some of our more mature parts of our business. We'll tell you more once we complete the action. ... It's just a broad-based restructuring of a variety of mature activities in the company to improve the focus on the growing parts of our business, as well as the efficiency of operating the mature parts of our business which are now declining."

Joseph F. Kovar

Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at jkovar@thechannelcompany.com.

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