CORRECTED-UPDATE 1-NetApp boosts share buyback by $1.6 bln; starts dividend

Tue May 21, 2013 5:08pm EDT

(Corrects adjusted profit in paragraph 13 to 69 cents per share from 68 cents per share)

* Says to repurchase $1 bln shares in 4 months

* Starts quarterly dividend of $0.15/shr

* Fourth-quarter profit $0.69/shr vs est $0.68

* Fourth-quarter revenue $1.72 bln vs est $1.76 bln

* Shares up 4 pct in post-market trading

May 21 (Reuters) - Data storage equipment maker NetApp Inc said it plans to buy back $1 billion in shares in the next four months and started a quarterly cash dividend, sending its shares up 4 percent in extended trade.

The company also boosted its stock repurchase program by $1.6 billion to $3 billion and said it plans to complete it in the next three years.

Media reports said last week that activist investor Elliott Management had taken a "significant" stake in the company and intended to push for changes to the board and the company's cash return strategy.

NetApp set a quarterly cash dividend of 15 cents per share, which it intends to increase over time.

The growing popularity of smartphones and tablets, which access data over the Internet, has fueled demand for storage products sold by NetApp and rivals such as EMC Corp.

But NetApp's major customers -- the U.S. military and intelligence agencies -- have reduced spending after the U.S. government began implementing budget cuts in March.

The company said on Tuesday it had cut 900 jobs, or about 7 percent of its workforce, and expects to take a pre-tax restructuring charge of about $50-$60 million this quarter.

The company, which also competes with Hewlett-Packard Co and IBM Corp in the storage equipment business, said it expects first-quarter adjusted earnings of 45 cents to 50 cents per share on revenue of between $1.48 billion and $1.58 billion.

Analysts on average had expected earnings of 53 cents per share on revenue of $1.6 billion, according to Thomson Reuters I/B/E/S.

Revenue rose marginally to $1.72 billion in the fourth quarter.

Revenue in the company's services business, which brings in a quarter of its total sales, rose 8 percent to $351.7 million, while that in NetApp's core equipment business fell 2 percent to $1.14 billion.

Net income fell to $173.8 million, or 47 cents per share, from $180.7 million, or 47 cents per share, a year earlier.

Excluding items, the company earned 69 cents per share. Analysts had expected adjusted earnings of 68 cents per share on revenue of $1.76 billion.

The company's shares, which have gained more than 8 percent in the last one month, were trading at $37.16 in post-market trading, after closing at $36.63 on the Nasdaq on Tuesday. (Reporting By Lehar Maan and Supantha Mukherjee in Bangalore; Editing by Saumyadeb Chakrabarty)