Feeds

NetApp peers into the economic gloom

Foggy vision

Top three mobile application threats

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. ®

High performance access to file storage

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
Kingston DataTraveler MicroDuo: Turn your phone into a 72GB beast
USB-usiness in the front, micro-USB party in the back
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Inside the Hekaton: SQL Server 2014's database engine deconstructed
Nadella's database sqares the circle of cheap memory vs speed
BOFH: Oh DO tell us what you think. *CLICK*
$%%&amp Oh dear, we've been cut *CLICK* Well hello *CLICK* You're breaking up...
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.