NetApp To Shed Another 6 Percent Of Its Workforce
Nine months after announcing it will cut about 12 percent of its workforce, storage vendor NetApp said it will implement a global restructuring that will result in the layoffs of another 650 employees, or 6 percent of the workforce.
In a statement, NetApp said the cuts come amid a continued transformation to focus on the "growing" areas of all-flash arrays, next-generation data centers and hybrid cloud solutions.
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NetApp said it remains "confident that with sustained execution" it can return to what it called "moderated growth" in its fiscal year 2018 which begins in May 2017.
NetApp earned $64 million on sales of $1.29 billion for its 2017 first fiscal quarter ended July 29 compared with a loss of $30 million on sales of $1.34 billion in the same quarter one year ago.
In February, NetApp, based in Sunnyvale, Calif., cited similar factors in announcing a 12 percent workforce reduction. The company said it was seeking to re-align resources with the biggest opportunities, particularly in the vendor's all-flash storage array and Clustered Data OnTap businesses.
Eric Collins, chief technology officer of PCPC Direct, a NetApp partner based in Houston, said that although NetApp appeared to be late to the all-flash game, the vendor's installed base "seems pretty safe right now." He said the installed base continues to have confidence in the NetApp portfolio.
The cuts will take place through the end of the company's 2017 fiscal year in April, according to Judy Radlinsky, a NetApp spokeswoman. In an email to CRN, Radlinksky said most employees whose roles have been eliminated will be notified by Friday. But actions in some areas outside the U.S. will be subject to local consultation processes, "which are ongoing and are therefore not final" until those processes are complete.
In Thursday's statement, NetApp said CEO George Kurian has been looking to boost productivity and cut costs to align with revenue expectations and invest in growth areas. "We are starting to see results from these investments," the statement read.
In an appearance last week at the Best Of Breed Conference in Atlanta, hosted by CRN's parent, The Channel Company, Kurian said NetApp is relishing its role as the last large independent storage vendor after Dell acquired archrival EMC.
"What customers really want is to bridge the world of enterprise IT with the world of cloud IT," he said in a live, on-stage interview with Robert Faletra, CEO of The Channel Company. "We started that journey four years ago, well before these transactions were created … ."
With all-flash, Kurian said he's not concerned with being first to market. "When we look at what a new technology does, we want to time it to the first to mainstream market. What does that mainstream market look for in terms of business value, customer requirements, and the readiness of the underlying technology?’ he said.
Earlier this year, NetApp acquired all-flash storage systems leader SolidFire in a deal valued at $870 million. At the time, NetApp was rebuilding a business that had been declining for a year, but its acquisition of SolidFire gave it access to one of the pioneering startups in the all-flash storage array business.
NetApp employs about 11,000 in more than 100 offices worldwide. In its 2016 fiscal year, which ended April 29, it reported $5.5 billion in net revenue, a drop of $577 million, or 9 percent, from fiscal 2015. Its net income, $229 million, a 59-percent plunge from fiscal 2015.
Thursday's announcement comes less than two weeks before NetApp is scheduled to deliver its second-quarter financial results for its 2017 fiscal year.
In a document filed Thursday with the U.S, Securities and Exchange Commission (SEC), NetApp said it expects to incur charges of between $50 million and $60 million due to the layoffs as well as other charges associated with the restructuring. It also said in the SEC filing that most of the charges would be incurred during the third quarter, which began last week.
NetApp stock finished up slightly in trading Thursday, closing at $32.45 a share, up from $32.42.