NetApp profit beats; sees strong current quarter
(Reuters) - Data storage equipment maker NetApp Inc's second-quarter adjusted profit beat analysts' expectations on higher service and maintenance revenue, and it forecast a strong current quarter, sending its shares up 12 percent in extended trading.
The company, which competes with EMC Corp, Hewlett-Packard Co and IBM Corp in the storage equipment business, expects third-quarter adjusted profit of 53 cents to 58 cents on revenue of $1.58 billion to $1.68 billion, largely above expectations.
NetApp has been struggling with falling sales as worsening conditions in Europe exacerbate competition in the server storage market.
Chief Executive Tom Georgens on a conference call with analysts acknowledged a slowing demand due to the macro-economic conditions but said non-original equipment manufacturer sales are holding up well.
FBN Securities analyst Shebly Seyrafi said the company was going to have a strong new product cycle, with its recently launched 3250 and 3220 platforms.
The 3250 and 3220 are the new series of midrange storage platforms, which NetApp launched earlier this month.
The company's profit for the quarter ended October 26, excluding one-time items, was 51 cents per share. Analysts had expected earnings of 48 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose about 2 percent to $1.54 billion, in line with estimates.
Software entitlements and maintenance sales were up about 11 percent at $219.4 million and services up about 11 percent at $326 million.
NetApp shares were at $30.29 in extended trading. They closed at $27.12 on Wednesday on the Nasdaq.
The company also expanded its share-repurchase program, with a fresh $1.5 billion boost.
(Reporting By Aurindom Mukherjee & Neha Alawadhi in Bangalore; Editing by Sriraj Kalluvila, Maju Samuel)