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Technology Stocks : Network Appliance -- Ignore unavailable to you. Want to Upgrade?

To: im a survivor who wrote (9542)	11/14/2001 10:09:27 PM
From: SecularBull	Respond to of 10934

Network Appliance stock falters Flat forecast despite signs of market-share gains By Chris Kraeuter, CBS.MarketWatch.com Last Update: 6:14 PM ET Nov. 14, 2001 SUNNYVALE, Calif. (CBS.MW) -- Network Appliance shares dropped 16 percent on Wednesday following the data storage company's second-quarter financial report and its outlook for the current quarter. While Network Appliance beat Wall Street's financial targets, executives said results should be steady during the company's fiscal 2002 third quarter, which ends Jan. 31. Analysts at CIBC World Markets and Deutsche Banc downgraded ratings on the company's shares, based on their high valuation and on a lack of apparent acceleration for Network Appliance's revenue. In the past month, shares climbed from $10 to as high as $18.75. However, investment banks UBS Warburg and Needham & Co. simply adjusted their financial estimates and seemed impressed with the company's performance and business plan. Shares of Network Appliance (NTAP: news, chart, profile) fell $2.90 to $15.29 on Wednesday. Late Tuesday, Network Appliance reported a second-quarter net loss of $11.2 million, or 3 cents a share, on revenue of $194.7 million. Excluding charges, net income was $7.7 million, or 2 cents a share. An unexpected tax benefit due to lower operating costs helped pro forma earnings by half a cent. Analysts surveyed by Thomson Financial/First Call had expected the company to break even on quarterly earnings, excluding charges, with revenue projected at $192.2 million. For the third quarter, executives said financial results will approximate those of the just-completed quarter. Analysts have been expecting earnings of one penny a share on revenue of $208 million. Gross margins improved sequentially in the latest quarter, to 58.4 percent from 56 percent. During the year-ago period, gross margins hit 61.9 percent. Grabbing for market share Network Appliance President Tom Mendoza said the improvement in margin from the first quarter is an indication of market share gains, "which separates us from other people." Business was as expected during the quarter, with the firm's business model and its environment "solidifying," Mendoza said. "We don't have a sense that the economy is growing. It's the same for everyone else, so it's about taking market share at this point," he said during an interview with CBS.MarketWatch.com. He said business was strong in all three of the company's geographic regions, new accounts were very strong and the company had "a number of large, significant wins allowing us to rebuild our backlog." The company's book-to-bill ratio, a measure of orders received compared to outgoing shipments, was better than 1.0, which means there were more orders coming in than product going out. During second quarter last year, net income was $35.4 million, or 10 cents a share, on revenue of $260.8 million. During the fiscal first quarter this year, Network Appliance had a net loss of $500,000, or breakeven on a per-share basis, on revenue of $200.4 million. Excluding charges, net income was $4.7 million, or a penny a share.