DOW JONES NEWSWIRES
NetApp Inc.'s (NTAP) fiscal first-quarter profit fell 7.4% as a series of charges and a weak macroeconomic environment hurt earnings.
The firm also projected a second-quarter profit of 58 cents to 62 cents a share and revenue of $1.5 billion to $1.6 billion. Analysts polled by Thomson Reuters predicted 60 cents and $1.61 billion, respectively.
Shares dropped 11% to $36.85 after hours on the downbeat revenue view as first-quarter sales came in at the low-end of the data-storage company's earlier guidance. The stock was up 7.8% over the past year through the close.
The company on Wednesday said Chief Financial Officer Steve Gomo will retire at the end of the year and named Nicholas R. Noviello, its senior vice president of finance and global controller, will replace him. Gomo, 59, joined NetApp in 2002. The company said the change resulted from a planned management succession.
NetApp's earnings had improved over the past year as margins generally widened and the firm claimed a growing market share from bigger tech companies. The data-storage sector has also grown as more customers adopt cloud computing and virtualization, which runs multiple computers' operations on a single server.
Earlier this year, the company bought LSI Corp.'s (LSI) external storage systems business for $480 million to meet growing demand.
Sales fell short of expectations in the latest quarter, however.
"Despite the challenging macroeconomic environment modestly impacting our revenue growth, NetApp still produced earnings per share slightly above the midpoint of our targeted range," Chief Executive Tom Georgens noted.
For the quarter ended July 29, NetApp posted a profit of $139.5 million, or 34 cents a share, down from $150.7 million, or 40 cents a share, a year earlier. Excluding stock-based compensation and other impacts, earnings rose to 55 cents from 51 cents as revenue grew 26% to $1.46 billion.
NetApp's May guidance projected a bullish profit between 52 cents and 57 cents a share with revenue of $1.46 billion to $1.55 billion.
Gross margin narrowed to 61.5% from 64%.
Product sales jumped 31% while revenue from the much-smaller software and service segments increased 14% and 22%, respectively.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;