NetApp sticks to pessimistic view of economy
LONDON (Reuters) - Data storage company NetApp Inc said the economic view in Europe was increasingly uncertain, justifying the pessimistic outlook it gave at the time of its last quarterly results.
Chief Executive Tom Georgens said Europe, a major market for the U.S. company, was stronger than expected for most of the year but worries about the debt situation in the south of the continent were starting to spread to Germany, Britain and France.
"Clearly we are concerned about the trajectory of where we are heading," he said at the Reuters Media and Tech summit.
"Not only the trajectory is a concern but there is a wide range of potential outcomes."
NetApp last month forecast revenue below Wall Street's expectations and warned of uncertainty in Europe, sending the data storage equipment maker's shares down 18 percent.
"Between that earnings call and today there hasn't been any better macroeconomic news whether in the U.S. or Europe," Georgens said in London on Tuesday.
"I think the quarter itself was good, and if you think we were too cautious that's fine, maybe we'll do better than you think."
The major European markets of Germany and Britain had been relatively strong up to now, Georgens said, but he was starting to see concerns about a slowdown in those countries as well.
"That's why it is different now than six months ago, or a year ago."
NetApp, which competes with EMC Corp, said it was positive about growth in Asia-Pacific, but it was seeing weakness in U.S. public spending, particularly in defense.
"We have concerns about the broader growth of the United States but it is relatively stable," Georgens said.
Georgens added the downturn was forcing companies to look at how they could use technology to save money, particularly in storing and managing data more efficiently.
"We have technologies that allow you to reduce the amount of physical space that storage will take, allowing you to take out redundant parts of your data," he said.
"If you look at NetApp this past year, we had the biggest new customer acquisition year in our history.
Despite the slowdown, the group was seeing increasing demand from companies moving to virtual PCs, whereby data common to the business is stored remotely rather than on individual desktops, and companies access their data from multiple devices, such as PCs, tablets and smartphones.
"Storage is essentially a consumable, and I think storage will outgrow the other hardware components of IT," he said.
"I'm hoping this is a precursor to expanding our customer base. Over the long run it does bounce back, but in the near term certain industries, such as financial services, are under a lot of spending constraints."
(Reporting by Paul Sandle; Editing by Jon Loades-Carter)
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