Goldman Wary on Net App

Network Appliance Inc. (Nasdaq: NTAP) came in for a further beating Tuesday evening from Goldman Sachs & Co., whichreleased a report saying that Net App may miss the bank's revenue estimates when it reports its first-quarter earnings August 14.

The news is at odds with midday activity on the Nasdaq Wednesday, as Network Appliance's stock soared 23 percent from yesterday's close. Net App had no explanation for the increase.

Analyst firms Wit Capital Corp. and First Union Securities have both been bullish on companies in the storage sector this week, which might be fueling the gain (see First Union Initiates SAN Coverage ).

Analyst Laura Conigliaro, the author of the Goldman report and one of the storage industry's leading savants, says, Although wehave been forecasting revenues below company targets of around $225 million, we think our estimate of $218 million may still be too high.”

Consensus estimates from First Call suggest revenues of about $214million.Conigliaro says that even though it looks like business picked up at theend of the quarter it's probably not enough to offset weakness for May andJune. She also thinks estimates for the full year may have to come down, yetagain.

Nevertheless, a day earlier Wit Soundview analyst GlenIngles said if Network Appliance reports revenues of more than $200 million,the stock could rally. He says signs of improvement in North America and apickup at the end of the quarter could boost the stock.

Both analystsstill like the long-term prospects for Network Appliance.

— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com

Movers and shakers from more than 100 companies – including Network Appliance – will be speaking at StorageNet, Byte and Switch’s annualconference, being held in New York City, October 2-5, 2001. Check it outat StorageNet2001