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CEO likes NetApp alone against giants
May 21, 2010 / 4:54 PM / in 7 years

CEO likes NetApp alone against giants

<p>Tom Georgens, chief executive of NetApp Inc., speaks at a Reuters Technology Summit in San Francisco, California May 18, 2010. Data storage equipment maker NetApp Inc on average could grow revenue by 15 to 20 percent a year as it gains market share from rivals, Georgens said on Tuesday. REUTERS/Kim White</p>

SAN FRANCISCO (Reuters) - When Tom Georgens took over over as CEO of storage equipment maker NetApp Inc (NTAP.O) last August, the technology sector was in the midst of a record decline.

He navigated the company as it emerged from the economic storm, watching its stock price climb 56 percent in nine months, nearly triple the gain of rival EMC Corp EMC.N.

NetApp storage boxes plug into computer networks in a way that the company says is simpler than rival technology.

Georgens is planning to plough money into expanding sales and engineering, rebutting the question that he called “Is NetApp investing off a cliff?” with the argument that NetApp may never again have such a chance to win over customers.

“Crisis is the easiest time to manage because the objectives are clear. If you are drowning, the objective is to swim. If you are on fire, the objective is to put it out. Now it’s like, ‘we dodged that bullet, life is good.'”

His goal is deliver average annual revenue growth of 15 to 20 percent.

“It’s a challenging number, and it’s an achievable number,” he told the Reuters Global Technology Summit in San Francisco on Tuesday. “If we get there, it’ll be a good outcome for the company, certainly better than any acquisition.”

In the process, he said, NetApp will take market share from bigger rivals and move up from fifth to second place in the $20 billion a year market for corporate data storage equipment.

Although he has only been at the helm of NetApp since the middle of last year, Georgens, 50, is an industry veteran who has held management positions with competitors, including EMC, where he spent 11 years.

He is betting that corporations can’t last much longer with old storage equipment, see possibilities to save money if they re-engineer their networks, and need to fundamentally change the technology they depend on -- not just get systems that are faster or hold more.

So, even with concerns about Europe’s economy, he is looking to take market share from his bigger rivals by boosting spending on product development and sales.

NetApp had 8.6 percent of the global network storage market last year, compared with 9.1 percent for Dell Inc DELL.O and 11.7 percent for Hewlett-Packard Co (HPQ.N). IBM (IBM.N) controlled 14.2 percent, while EMC was the clear leader with 22.7 percent, according to data from IDC.

“Right now I think we’ve got momentum in the market,” he said, adding that he did not want to look back in future years and regret missing an opportunity to grow.

“This is our single biggest opportunity for share shift that we’ve ever had,” he said.

GOING SOLO

NetApp has been cited as an attractive takeover target, with names like Oracle Corp ORCL.O and International Business Machines Corp widely cited as potential bidders.

Those companies are vying to become “one-stop shops” offering a wide range of technology products and services including networking and storage.

Georgens indicated a preference for going it alone.

“As long as we can prove that we can gain share independently, then NetApp is better off independent,” Georgens said.

Reporting by Jim Finkle and Ritsuko Ando; Editing by Gary Hill, Bernard Orr

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