* Sees third-qtr adj earnings/share $0.68-$0.73 vs est $0.73
* Expects revenue $1.58-$1.68 bln vs est $1.69 bln
* Second-qtr adj earnings/share $0.66 vs est $0.63
* Revenue $1.55 bln vs est $1.60 bln
* Shares down 3 pct after the bell
By Lehar Maan
Nov 13 Data storage equipment maker NetApp Inc
forecast current-quarter revenue below analysts'
expectations, flagging concern around the U.S government's
NetApp shares fell almost 3 percent after the bell.
The company, which competes with EMC Corp,
Hewlett-Packard Co and IBM Corp in the storage
equipment business, forecast third-quarter adjusted earnings of
68-73 cents per share.
Analysts on average were expecting 73 cents per share,
according to Thomson Reuters I/B/E/S.
NetApp said it expects revenue to be between $1.58 billion
and $1.68 billion, below the $1.69 billion analysts were
"Certainly we are being conservative as we build our
guidance on the federal sector going forward," Chief Financial
Officer Nicholas Noviello told Reuters.
"We believe that injects another element of uncertainity
into the macroeconomic environment," Noviello added.
Noviello said the company generated 16 percent revenue from
its public sector in second quarter, which also includes sales
to the federal agencies. NetApp does not break down revenue
under the public sector.
"I think there is going to be some lingering issues in terms
of federal spending for the next quarter or two, which makes me
concerned about NetApp, which has relatively high exposure to
the U.S. public market," FBN Securities analyst Shebly Seyrafi
Rival EMC Corp also cut its full-year forecast in October
due to the two-week U.S. government shutdown.
Automatic federal spending cuts - known as sequestration -
that began earlier this year, and the 16-day partial U.S.
government shutdown that commenced in October have weighed on
Noviello also said the revenue from original equipment
manufacturers (OEM) was down more than expected due to fewer
orders from customers. OEM contributed a tenth of total revenue.
The company sells more than 80 percent of its products
indirectly through value-added resellers, systems integrators,
distributors, original equipment manufacturers and strategic
Two brokerages downgraded NetApp's stock and at least seven
lowered their price targets after the partial government
NetApp's net income rose to $166.8 million, or 48 cents per
share, in the second quarter from $110 million, or 30 cents per
share, a year earlier, helped by growth in its high-margin
Excluding items, the company earned 66 cents per share,
above analysts' expectation of 63 cents per share.
Revenue for the quarter ended Oct. 25 was $1.55 billion,
while analysts had estimated $1.60 billion.
Shares of the Sunnyvale, California-based company closed at
$41.29 on the Nasdaq on Wednesday.