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NetApp lays off staff

Six per cent to go

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NetApp is laying off up to six per cent of staff as it copes with a recession that's affecting enterprise storage purchases.

According to Jodie Bauman, director of corporate PR: "Today NetApp took a number of steps to better align our resources with the business outlook. This restructuring includes a reduction of about 6 per cent of the global workforce, as well as the reallocation of other resources to initiatives designed to increase operating efficiency and build a foundation for additional market share gains."

With a workforce of about 8,000 that means up to 480 jobs are at risk.

NetApp will announce its third quarter fiscal 2009 results on Wednesday. This quarter, which ended January 23, 2009, includes the last two months of 2008 during which revenues took a steep downturn for many IT suppliers. By making these cuts NetApp is sending a pretty clear signal that its Q3 fy09 results will be pretty badly depressed. There are no details available on where the headcount reductions will fall.

Last year NetApp deliberately boosted its sales headcount in order to increase its coverage of enterprise accounts where it thought it was under-represented. With enterprises turning their IT purchase tap down, the yield from NetApp's increased salesforce is not high enough to sustain the current headcount levels. There is also a message here that NetApp thinks the recession will last several quarters more. Otherwise it could afford a short-term hit to its revenues.

NetApp very recently announced the closure of its S Family, aka StoreVault, low-end storage product line. It also closed its SnapMirror for Open Systems product line in December.

Other storage companies such as EMC, Seagate and Western Digital have also announced lay-offs.

NetApp was recently voted the best company to work for in a Fortune survey.

In Q3 fy08 NetApp recorded revenues of $884m and net income of $101.8m. In the the second quarter of fiscal 2009 its revenues were $911.63m and net income $49.2m.

NetApp shares are currently priced at $16.22 and have enjoyed a rally since December 26th, when they were $12.59. ®

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