NetApp Posts Loss Amid Product Overhaul, Restructuring
August 19 2015 - 8:00PM
Dow Jones News
By Maria Armental
NetApp Inc. swung to a loss in the first quarter as product
revenue dropped sharply amid a major product overhaul and the
data-storage company logged $27 million in costs tied to a
previously announced restructuring.
Product revenue fell to $664 million, down 27% from the previous
quarter and 25% from the year-ago period, largely tied to a decline
on Data ONTAP 7-Mode sales. NetApp is trying to shift customers to
its latest storage operating system, what is calls clustered Data
ONTAP or cDOT.
Company officials, who called this a transition year, said
product revenue would pick up in the second quarter and return to
its target operating margin of 8% to 20% in the second half of the
year.
"The IT industry as a whole is going through fundamental change
as enterprises transform themselves with digital capabilities. Data
is at the heart of these transformations," Chief Executive George
Kurian said. He added: "Our first fiscal quarter marks the
beginning of a new chapter for NetApp."
Mr. Kurian, who previously oversaw strategy and development of
the company's product and solutions portfolio, became the chief
executive in June, less than two weeks after the Silicon Valley
company said it would lay off 500 workers, or about 4% of its
global workforce. NetApp said it expected to complete the overhaul
by the third quarter and estimated the cost at $25 million to $35
million.
Shares, which set a 52-week-low during regular trading
Wednesday, rose 10% to $32.85 in late trading.
For the current quarter, NetApp projects 55 cents to 60 cents a
share in profit on $1.4 billion to $1.5 billion in revenue,
compared with the consensus of 46 cents a share on $1.39 billion in
revenue, according to analysts surveyed by Thomson Reuters.
Over all, for the quarter ended July 31, NetApp reported a loss
of $30 million, or 10 cents a share, compared with a year-earlier
profit of $88 million, or 27 cents a share. The most recent quarter
had 7.6% fewer shares outstanding than the year-earlier period.
Excluding stock-based compensation and other items, earnings
fell to 29 cents a share from 60 cents a share a year earlier.
Net revenue fell 10% to $1.34 billion.
NetApp had projected profit of 20 cents to 25 cents a share on
$1.28 billion to $1.38 billion in revenue.
Gross margin narrowed to 61.1% from 63% a year earlier.
The Sunnyvale, Calif., company ended the quarter with $5 billion
in cash.
Through Wednesday's close, the company's stock was down 28% for
the year.
Write to Maria Armental at maria.armental@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 19, 2015 19:45 ET (23:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
NetApp (NASDAQ:NTAP)
Historical Stock Chart
From Aug 2024 to Sep 2024
NetApp (NASDAQ:NTAP)
Historical Stock Chart
From Sep 2023 to Sep 2024