NTAP ($12-$13) P/E 61 Came in even, Sales lagged, sees next quarter flat."Believes the slide has leveled off"
Tuesday August 14, 8:14 pm Eastern Time
Network Appliance cuts jobs, profits dip
(UPDATE: adds details, analyst comments, byline)
By Peter Henderson
SAN FRANCISCO, Aug 14 (Reuters) - Computer storage maker Network Appliance Inc. (NasdaqNM:NTAP - news) on Tuesday reported a sharp drop in quarterly operating earnings, as expected, and said it would cut 200 jobs and take a charge of $6 million to $8 million in the current quarter after sales missed forecasts.
Chief Executive Dan Warmenhoven said he had been wrong three months ago to predict the economy had hit bottom, but nonetheless believed the slide had leveled off now.
The maker of stand-alone storage systems for computer networks said net profit, excluding one-time items, wa???million, or 1 cent per diluted share, down from a profit of $32.6 million, or 9 cents per share, a year ago.
Sales fell to $200.4 million from $231.2 million over the same period.
Earnings per share met Wall Street estimates, but sales lagged forecasts by about $15 milli Ji???r, when net operating income was $7.9 million, or 2 cents per share, on sales of $226 million.
The Sunnyvale, California-based company's stock ticked up to $12.80 in after-hours trade from a close of $12.76 on Nasdaq prior to the announcement.
``The restructuring charges will help the company lower the break-even level,'' U.S. Bancorp Piper Jaffray analyst Ashok Kumar said. But he added that: ``We remain unsure where NTAPs (Network Appliance's) margins will bottom out,'' he added.
The company saw second-quarter results similar to those in the first as the economic downturn slowed, but Kumar said: ``I would take that with a bucket of salt.''
Network Appliance's storage boxes are single purpose machines which are integrated into traditional computer networks, while competitors like EMC Corp.(NYSE:EMC - news) build more complicated storage netwo???d both are down by more than half.
WINNING DEALS, CUTTING PRICES
Warmenhoven said the competitors were not taking away business although Network Appliance was cutting some prices and would continue to do so if necessary to keep winning deals.
Cost cu???ven told Reuters in an interview that the market had improved in July and customers had not changed their information technology budgets for two or three months, a sign of improvement.
``I think at this point we are in fact a lot more confident that we found the bottom Gi???ost of sales as a percentage of revenue, was steady on the fiscal fourth quarter at 56.1 percent, and would be ''flattish" again this period, Warmenhoven said.
He estimated current-quarter sales of $200 million to $210 million, which would be flat to 5 percent higher than in the prior period. He forecast operating ear Fi???business, he added.
Chief Financial Officer Jeff Allen said margins could still decline. "I see price pressure continuin Ec???ens analyst Dane Lewis said he did not see any indications that the market had bottomed out but he commen Du Du?? !?1/2 L+1/2 Ka DI L+1/2 JY`1/2 JY???`?? JYompetitors in the market for stand-alone network attached storage, or NAS, devices, made things tough for the company though.
``They are getting attacked from a number of angles and all those things are happening at once for them, and that makes things particularly challenging,'' he said.
Including adjustments f Ji???$5.0 million, or 1 cent per share, in the year-ago period. |
