Analysts surveyed by First Call expected the company to report net income of 10 cents a share for the fiscal third quarter, which ended Jan. 26. Some customers delayed spending because of the overall economic slowdown, Chief Executive Dan Warmenhoven said during a conference call following the announcement, but that factor was limited to the United States and was offset by continued dominance over competitors and the results of a beefed-up sales force. The company stood by analyst projections for its upcoming quarter and the next fiscal year. The next two quarters, revenue will grow sequentially at the low end of the company's estimated range of 10 to 15 percent, said Chief Financial Officer Jeffry Allen. NetApp, like its higher-end competition EMC, sells storage devices and thus has been somewhat insulated from slowing growth in technology spending by large companies.
Analysts still say the company is strong.
Thomas Weisel Partners' Doug van Dorsten said he expects NetApp to keep its market share of more than 60 percent in the NAS market, despite increasing competition from EMC and just about every server manufacturer. Most of the company's customers are large businesses, he said. Warmenhoven said EMC's new IP4700, a direct competitor to NetApp's products, costs 40 percent more than a NetApp machine comparably equipped with 3.6 terabytes of storage capacity. And NetApp President Tom Mendoza said IP4700 isn t at the top of the EMC's sales force's agenda. New customers in the most recent quarter include Air New Zeland, Oracle's application service provider business, and energy companies Haliburton, Exxon and Enron, Mendoza said.