Network Appliance shares skidded after the data-storage company forecast lower-than-expected revenue due to banks cutting orders and Citigroup cut its rating on the stock to "hold" from "buy." Jefferies and RBC cut their price targets on the stock. (CNBC)
Banking Woes to Take a Bite Out of NetApp Sales, CEO Says
Research Triangle Park — The subprime mortgage crisis and the financial malaise setting in on the financial industry is hitting Network Appliance.
In releasing quarterly earnings on Wednesday, NetApp (Nasdaq: NTAP) warned that future revenues are likely to suffer as the world economy slows. NetApp, which has a large and growing campus in Research Triangle Park, relies on big banks for many of its data storage sales.
However, Chief Executive Officer Dan Warmenhoven said that the company is working to become less reliant on the financial sector.
"We are less concentrated now, but the problem has spread," Warmenhoven said in an interview with Reuters.
NetApp shares fell nearly 6 percent in after-hours trading after to fall under $22. The stock closed up 7 percent at $23.04 during the day Wednesday.
Despite a slowing economy, Warmenhoven told Reuters the company would continue to hire more workers and step up its marketing efforts.
For the most recent quarter that ended Jan. 25, NetApp beat Wall Street estimates with a profit of $101.8 million, or 29 cents per share.
A year earlier NetApp posted a profit of $66.5 million, or 17 cents. Excluding one-time and special charges, NetApp said earnings hit 37 cents per share on a profit of $131.7 million. Analysts polled by Thomson Financial had expected revenues of 34 cents per share. Analysts generally don’t include one-time charges in their forecasts.
Overall, revenues for the quarter increased to $884 million compared to $729.3 million the previous year. Analysts had forecast $878 million in revenue.
The company added, however, that its current quarter results are not expected to meet forecasts.
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