Storage Spending Knocks NetApp

NetApp has joined the list of storage vendors to fall foul of the IT spending slowdown, and speculation is mounting that the firm is coming under pressure from rivals IBM, HP, and EMC.

A number of vendors have already felt the impact of a cautious U.S. spending climate -- a trend which continued in NetApp's annual results, which were released last night. (See NetApp Announces Q4 Results, HP's Storage Slowdown, Overland Struggles With 'Softness', LSI Promises Better, and Isilon: The Honeymoon's Over.)For the full year, NetApp reported annual revenues of $2.8 billion, up 36 percent on 2006, although the firm has lowered its first quarter guidance in response to the spending slowdown. "Without the benefit of normal backlog, we do not expect our usual level of revenue during Q1," explained NetApp CFO Steve Gomo during a conference call last night, adding that the firm is lowering its Q1 revenue forecast by between 6 and 7 percent -- a $70 million shortfall.

The vendor has also changed its hiring strategy, and is planning to increase its headcount by between 200 and 250 people in Q1, compared to 487 in the prior quarter.

On the conference call, NetApp CEO Dan Warmenhoven added that "everything kind of slowed down" during the month of March. "We're clearly not immune from macroeconomic forces and [we have] stretched out our sales cycles."

In response to a question from an analyst, Warmenhoven cited recent comments by former Federal Reserve chairman Alan Greenspan, who suggested that the U.S. economy may enter recession in the second half of the year. "It's very clear that the U.S. enterprise accounts got very cautious," he said, adding that recent stock market trends indicate a more positive economic outlook.