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NetApp layoffs loom as biz 'operationalizes strategy', 'prioritizes investments'

Big round of redundancies feared as sales sink

NetApp is preparing to layoff employees in the wake of money troubles, The Register has learned. The numbers could run into the thousands.

We understand CEO Tom Georgens sent a warning email to all employees in February suggesting redundancies may be necessary for the storage biz to hit its financial targets. NetApp's business units have since been evaluating the scale of the so-called reduction in force (RIF) – up to a third of the company could go, one industry source has told us. NetApp employs about 12,600 people.

The background is that NetApp announced poor third-quarter sales – four per cent down on the year-ago period to $1.55 billion – and implied it could face a revenue slide for its full 2015 financial year compared to the previous 12 months.

The company has pink-slipped employees in the past: some 600 went a couple of years ago, nine per cent of the headcount, we understand. This latest RIF could be more than that as a US WARN (Worker Adjustment and Retraining Notification) Act threshold appears to have been crossed, triggering the chief exec's email.

The WARN Act specifies that employers must give employees 60 days of notice when significant plant closures and/or mass layoffs are coming. This is the first time, we are told, NetApp has given notice of forthcoming layoffs.

NetApp just folded its designed-from-the-ground-up all-flash array FlashRay development effort into its ONTAP organization, losing the project head Brian Pawlowski to Pure Storage in the process. That could be seen as having a cost-reduction aspect to it.

We asked NetApp whether or not huge layoffs are coming, and a spokesperson told us:

We are confident in our strategy and product portfolio. As discussed on our Q3 earnings call, we are prioritizing investments to drive growth and differentiate NetApp, within the boundaries of our business model. Our focus is on operationalizing our strategy to take full advantage of the opportunity in front of us.

We'll leave it as an exercise for the reader in deciding whether that's a yes or no answer. ®

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