Dow Jones Newswires -- May 19, 2000
Dow Jones Newswires
Network Appliance Plans Aggressive Spending
By RICK JURGENS
(This report was originally published late Thursday.)
PALO ALTO, Calif. -- Network Appliance Inc. (NTAP) Chief Executive Dan Warmenhoven said
that the company is committed to invest aggressively to expand its business.
"We think there's too much opportunity out there to not pursue new initiatives as fast as we can
afford to fund them," Warmenhoven told analysts in a conference call.
Warmenhoven and other executives were upbeat in the call, which followed a fourth quarter
earnings announcement in which the Sunnyvale, Calif., network data storage equipment maker
more than doubled revenue and beat analyst earnings estimates.
Network Appliance posted income of $24.5 million, or 7 cents a share, for the quarter ended April
28, up from $10.7 million, or 3 cents a share, a year earlier. The analysts' consensus estimate was
6 cents a share. Network Appliance reported revenue of $200 million, up from $90.8 million a
year earlier.
That was impressive, said analyst Dane Lewis of Robertson Stephens, noting that the company is
"accelerating revenue growth as they get bigger."
"The market is growing, probably faster than people have modeled," he said.
George Elling, an analyst with Lehman Brothers Inc., said, "The company has seized the market
and continues to deliver outstanding results." The opportunities in the market might eventually draw
some bigger competitors, he added.
But Warmenhoven said the company was tired of hearing speculation about possible formidable
new competitors. He dismissed such talk as "shadowboxing with paper tigers."
"The competitive environment has not changed significantly," he said.
Network Appliance executives also dismissed concerns that their network-attached data storage
equipment lacked the capacity to compete with alternative technologies. "We've just scratched the
surface of the database market," Warmenhoven said.
Shares in Network Appliance were priced recently at 68 3/4 in after-hours trading, down from the
Nasdaq close of 69, according to Island ECN. The stock reached a 52-week high of 124 on
March 10, up from its 52-week low of 9 27/32 on June 15.
Lewis said that some investors might have been planning to sell in the wake of expected strong
news from the company and a recent run-up in the stock price.
Fourth quarter sales growth was driven by sales force expansion and year-end sales commission
incentives, said Jeffry Allen, chief financial officer. Sales and marketing expenses rose to 27.5% of
revenue, up from 26.1% a year ago.
Sales to Internet users accounted for about 40% of the company's revenue, Allen said.
-By Rick Jurgens; Dow Jones Newswires; 650-496-1367;
richard.jurgens@dowjones.com |
