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NetApp: We're OK
Network Appliance made it clear today that it will not stumble this quarter as EMC did last quarter -- and as a few analysts suspected NetApp would. (See NetApp Confirms Guidance.)
Network Appliance confirmed the forecast it gave in May that its revenue for this quarter would grow 2 percent to 4 percent sequentially to a figure between $610 million and $622 million. The company also confirmed previous guidance that fiscal year revenues will grow around 28 percent to 30 percent, reaching $2.65 billion to $2.7 billion. The quarter runs through the end of July, and NetApp will officially announce its earnings August 16.
It's unusual for a company to repeat prior guidance, but it was an unusual week for NetApp from a share price standpoint. An SEC filing last week raised questions in Wall Street analysts' and investors' minds, and predictions followed that NetApp might not meet its previous forecast. (See NetApp Filing Prompts Concern.) Further, last Friday, EMC's poor results and a drop in that company's annual forecast raised concerns about the entire storage industry. (See Tucci: EMC's Problems 'Self-Induced'.) Morgan Stanley downgraded NetApp Monday. By the end of the day its share price had dropped more than 18 percent in a week.
NetApp confirmed guidance today to let everyone know things are sunny in Sunnyvale. According to one technology analyst, the announcement was overdue. "I've been waiting for the last week to hear something from Netapp," says Josh Farina of Technology Business Research. "They didn't specifically say in this announcement it was because of the analysts' reactions, but they're trying to do damage control."
Wall Street analyst Dan Renouard of Robert W. Baird & Co. agrees NetApp was reacting to speculation about the company. "We are encouraged by NTAP's confirmation, quelling rumors the company was having a difficult quarter," Renouard wrote in a note to clients today.
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