Feeds

NetApp peers into the economic gloom

Foggy vision

The Essential Guide to IT Transformation

NetApp is refusing to give guidance for the next quarter. You can guess why.

CEO Dan Warmenhoven today passed on a forecast for Q3'09. "It is very difficult to predict the depth and duration of the downturn," he said "The uncertainty around customer IT spending intentions reduces our confidence in the validity of our pipeline."

He said gross margin and OPEX would be about the same as for Q2.

The filer king today reported Q2'09 revenues of $912m, 15 per cent up on last year's $792m and 4.9 per cent up on the previous quarter. That's slower than the 20 per cent plus annual growth that NetApp is used to. But the cockroach scuttling out of the light was net income of $49m, 41 per cent down on Q2'08's $84m.

Operating expenses (OPEX) were 19 per cent higher than a year ago, despite a hiring freeze, and gross margin slipped from 61.1 per cent to a still healthy 59.9 per cent. NetApp has also curtailed share repurchases to conserve cash. /

In today's earnings call, Chief Operating Officer Tom Georgehens said the company has "curtailed headcount growth, we have eliminated most discretionary spending like travel and entertainment, we are reducing the size of our contractor Flex force, and we have reduced our capital spending plans in product development and IT."

He compared NetApp's lot to that of Cisco: "Cisco said that their bookings in October were down from the prior year. Our bookings in October were higher than last year. Unlike Cisco, we have just completed adding some significant additional sales capacity which should drive growth. And also unlike Cisco, we are not share-limited in our markets and we currently have the strongest value proposition in our history."

"Given these facts, we are slightly more optimistic than Cisco about the future."

So the good ship NetApp is sailing slower and sailing blind to some extent. Warmenhoven thinks NetApp, and other storage suppliers, will be more resilient than other IT sector companies because businesses are still amassing data and have to put it somewhere. But he also reckons that the IT industry's customers will be setting their budgets in January and that will determine demand for the rest of 2009.

We shall see soon enough if he is right. ®

The Essential Guide to IT Transformation

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Multipath TCP speeds up the internet so much that security breaks
Black Hat research says proposed protocol will bork network probes, flummox firewalls
VMware builds product executables on 50 Mac Minis
And goes to the Genius Bar for support
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
Microsoft's Euro cloud darkens: US FEDS can dig into foreign servers
They're not emails, they're business records, says court
Microsoft says 'weird things' can happen during Windows Server 2003 migrations
Fix coming for bug that makes Kerberos croak when you run two domain controllers
Cisco says network virtualisation won't pay off everywhere
Another sign of strain in the Borg/VMware relationship?
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.