* Sees second-quarter adj EPS $0.60-$0.65 vs est $0.63
* Sees second-quarter revenue $1.56 bln-$1.66 bln vs est
* First-quarter adj EPS $0.53 vs est $0.49
* First-quarter revenue $1.52 bln vs est $1.53 bln
* Shares down 4 pct after market
By Lehar Maan
Aug 14 Data storage equipment maker NetApp Inc
forecast current-quarter results largely below
expectations, sending its shares down 4 percent in extended
The company forecast second-quarter adjusted earnings of 60
to 65 cents per share, while analysts on average were looking
for 63 cents.
The company expects revenue to be between $1.56 billion and
$1.66 billion, largely below the $1.63 billion Wall Street had
estimated according to Thomson Reuters I/B/E/S.
The company typically sees higher sales in its second
quarter due to an increase in government spending closer to
September, the end of the federal government's fiscal year.
However, Craig Hallum analyst Rajesh Ghai said NetApp may
not be expecting the same level of pick up in government
spending as in previous years.
"The U.S federal government is going through a
sequestration, and there is a possibility that it may not spend
as much on IT this federal quarter. So that is weighing on their
guidance," he said.
Automatic federal spending cuts known as sequestration began
earlier this year when Congress failed to agree on an
alternative deficit reduction plan.
Rival EMC Corp said last month it expected higher
revenue at its VMware software unit in the second half
due to an anticipated pickup in federal government demand and
The company sells more than 80 percent of its products
indirectly through value-added resellers, systems integrators,
distributors, original equipment manufacturers (OEMs) and
strategic business partners.
In the first quarter, NetApp reported a sharp fall in sales
to OEM customers, who account for about 12 percent of the
Overall revenue rose 5.5 percent to $1.52 billion in the
first quarter, but narrowly missed the $1.53 billion analysts
"We expected our OEM revenue to be down in Q1 and it is down
20 percent," NetApp Chief Financial Executive Nick Noviello
said. "We expect it is going to be down in Q2."
Excluding one-time items, the company earned 53 cents per
share, 4 cents more than the average analyst estimate.
Profit rose to $81.6 million, or 23 cents per share, from
$63.8 million, or 17 cents per share, a year earlier.
Analysts said NetApp benefited from the release of its Ontap
8.2 storage operating system in June and a delay in the launch
of a new version of EMC's mid-range storage product.
The company, under pressure from activist shareholder
Elliott Management, said in May it would spend about $1 billion
in the next four months to buy back shares.
It said it had bought back $850 million of shares in the
quarter and paid out $50 million in dividends.
Shares of the Sunnyvale, California-based company closed at
$42.33 on the Nasdaq on Wednesday.