NetApp Launches Cost-Cutting Plan, Reports Drop in Earnings
February 17 2016 - 6:12PM
Dow Jones News
By Maria Armental
NetApp Inc. said Wednesday it plans to lay off 12% of its
workers as part of a broader roughly $400 million cost-cutting move
that the data-storage company expects to pay off by the end of
fiscal 2017.
The move comes as the Silicon Valley data-storage continues to
move its customers to its newest cloud-based storage system,
clustered Data ONTAP, or cDOT.
Chief Executive George Kurian said in a conference call with
analysts that the company doesn't intend to change its quarterly
dividend.
Mr. Kurian, who previously oversaw strategy and development of
the company's product and solutions portfolio, became the chief
executive in June.
NetApp estimates it will book about $60 million to $70 million
in costs tied to the layoffs in the fourth quarter. Shares, down
38% over the past 12 months, were largely unchanged in after-hours
trading.
Over all, for its current fourth quarter, NetApp projects 55
cents to 60 cents in adjusted profit on $1.35 billion to $1.50
billion in revenue. Analysts surveyed by Thomson Reuters projected
51 cents a share on $1.35 billion in revenue.
In May, NetApp announced plans to lay off about 4% of the
company's workers as part of a broader restructuring.
For the third quarter ended Jan. 29, NetApp reported a profit of
$153 million, or 52 cents a share, down from $177 million, or 56
cents a share, a year earlier. The most recent quarter had 6.6%
fewer shares outstanding than the year-earlier period, which
influences the per-share profit.
Excluding stock-based compensation and other items, the profit
fell to 70 cents a share from 75 cents a share a year earlier.
Net revenue fell to $1.39 billion from $1.55 billion a year
earlier as product revenue declined 19%.
NetApp had projected an adjusted per-share profit of 66 cents to
71 cents on revenue of $1.4 billion to $1.5 billion.
Gross margin narrowed to 61.7% from 63% a year earlier.
The Sunnyvale, Calif., company ended the quarter with $5 billion
in cash.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
February 17, 2016 17:57 ET (22:57 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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