NetApp Sags in the Middle

Network Appliance Inc. (Nasdaq: NTAP) had a tougher-than-expected time selling its new midrange systems last quarter. CEO Dan Warmenhoven blames internal competition among NetApp systems, while financial analysts suspect outside competition is taking its toll (see NetApp Lowers Forecast).

Warmenhoven Thursday night said NetApps preliminary results for the quarter that ended July 31 show revenue in the range of $446 million to $449 million compared to previous guidance of $465 million to $479 million. The new guidance represents a decline of approximately 1 percent from the previous quarter although still an increase of 25 percent or so from the same quarter last year.

Warmenhoven says customers took longer to evaluate NetApp systems last quarter following the rollout of new FAS3000 Fibre Channel-plus-SATA systems (see NetApp Promotes SATA). NetApp’s higher-end FAS960 and NearStore R200 disk backup systems also sold poorly in the quarter, which Warmenhoven attributed to customers buying FAS3000s instead.

He claims orders for the FAS3000 that closed within two days of the quarter’s end would have made up the $20 million to $25 million difference between forecasted revenues and actual revenues.

“Almost 90 percent of the FAS3000 systems shipped in the third month of the quarter,” Warmenhoven says. “Many customers went back to the evaluation stage when they heard of our new midrange system.”