NetApp 1Q Net Down 54% on Margin Pressures, Lower Sales
08/15/2012| 04:37pm US/Eastern
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By Kristin Jones
NetApp Inc.'s (>> NetApp Inc.) fiscal first-quarter profit fell 54% as the data-storage company's profit margin came under pressure and product sales dropped.
For the fiscal second quarter, the company expects adjusted per-share earnings of 45 cents to 50 cents on revenue of $1.5 billion to $1.6 billion. Analysts polled by Thomson Reuters recently estimated a profit of 46 cents a share on $1.54 billion in revenue. The company has held back from giving full-year guidance because of economic uncertainty.
NetApp, which stores and manages clients' information, has struggled to support earnings in recent quarters as some customers--particularly government and financial-services companies--hold back spending on data centers. Its results have contrasted with larger rival EMC Corp. (>> EMC Corporation), which has been reporting record quarters.
For the quarter ended July 27, NetApp reported a profit of $63.8 million, or 17 cents a share, down from $139.5 million, or 34 cents a share, a year earlier. Excluding stock-based compensation and other impacts, per-share earnings fell to 42 cents from 55 cents.
Revenue declined 0.9% to $1.44 billion.
The company's bleak May outlook called for per-share earnings of 34 cents to 39 cents on revenue of $1.4 billion to $1.5 billion.
Gross margin narrowed to 58.8% from 61.5%, as product and service costs grew.
Product sales, which comprise the bulk of the top line, declined 7%, while software segment revenue was up 10%, and revenue from service segments increased 11%.
Shares were up fractionally to $31.98 after hours. Through the close, the stock was down 12% so far this year.
Write to Kristin Jones at kristin.jones@dowjones.com
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