NetApp Channel Partners Playing Key Role In Shift Toward All-Flash Storage, Driving Q1 Profit Growth

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George Kurian
George Kurian

Solution providers are playing a big role in helping move NetApp's business toward its new strategic technologies, which contributed to solid growth in profitability during the storage company's first fiscal quarter of 2017, said CEO George Kurian Wednesday as the company disclosed its most recent quarterly financial results. 

NetApp's move away from its mature legacy technology toward modern strategic offerings such as all-flash storage led to a slight drop in revenue for the quarter but helped boost profits.

"We work closely with the channel to accelerate our offerings to market," Kurian said during the company's quarterly financial analyst conference call. The channel accounted for 77 percent of NetApp's total revenue.

About 61 percent of NetApp's total product sales stemmed from its strategic offerings, which include the Clustered Data Ontap storage operating system, the OnCommand Insight storage resource management tool, certain cloud services, and the company's all-flash storage lineup of the branded E-series, the All Flash FAS, and the SolidFire lines. That compares to about 51 percent during the first fiscal quarter of 2016.
Kurian said NetApp is clearly making progress as it moves through a period of slow growth in macroeconomic terms towards its new strategic solutions. "We believe these actions will return us to profitability growth," he said.
Kurian also said NetApp is feeling "pretty good" when asked about the impact of Dell's planned acquisition of EMC, noting that NetApp is displacing EMC in very large accounts without naming any specific examples. 

"We're building competitive offerings, and bringing our cost structures to be more competitive," he said.

NetApp reported total revenue for its first fiscal quarter 2017, which ended July 29, of $1.29 billion. That was down about 4 percent from the $1.34 billion the company reported for the first fiscal quarter of 2016.

For the Americas, revenue in the first fiscal quarter of 2017 was about $735 million, down from last year's $750 million.

NetApp reported fiscal first quarter 2017 earnings of $64 million, or 23 cents per share, up significantly from is loss of $30 million, or 10 cents per share, last year.

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