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UPDATE 2-NetApp sees weaker revenue as bank clients cut back

(Adds analyst comment, fourth-quarter EPS forecasts)

SAN FRANCISCO, Feb 13 (Reuters) - Network Appliance Inc NTAP.O posted a higher quarterly profit on Wednesday, but its shares fell after it forecast lower-than-expected revenue in the current quarter as banking customers cut orders.

The data storage equipment maker forecast fiscal fourth-quarter revenue of $915 million to $945 million, shy of the $960.7 million average estimate of analysts according to Reuters Estimates.

The stock fell as much as 5.7 percent in extended trading following the earnings report after closing up 7 percent at $23.04 on Nasdaq.

The weak targets “reinforce our view that tech spending will be particularly weak early in the year when chief information officers are likely to underspend already-reduced budgets,” Goldman Sachs analyst Min Park, who has a “neutral” rating on NetApp, said in an investor note after the results.

Chief Executive Dan Warmenhoven said weaker orders by U.S. financial services clients stung by the credit and mortgage crisis had spread overseas, with large banks including France's Societe Generale SOGN.PA cutting back on technology spending. Banks are among NetApp's largest customers.

“We are less concentrated now, but the problem has spread,” Warmenhoven told Reuters in an interview after company on Wednesday reported fiscal third- quarter results.

“They’re squeezing down all their expense structure internally,” Warmenhoven added. Technology budgets “are on the table.”

NetApp, based in Sunnyvale, California, plans to add jobs in marketing and sales to boost its market share in fast-growing industries such as telecommunications and energy and lessen dependence on banks, Warmenhoven said.

“The strategy going forward is to expand broadly,” he said.

Net income in NetApp’s fiscal third quarter advanced 53 percent to $101.8 million, or 29 cents per share, from $66.5 million, or 17 cents per share, a year earlier. Revenue grew to $884 million from $729.3 million.

The company reported third-quarter earnings before certain costs of 37 cents per share, exceeding the 34 cents-per-share estimate of analysts. Revenue beat analysts’ projection of $879.3 million.

NetApp had in November forecast third-quarter net income of 23 cents to 24 cents per share and earnings before items of 33 cents to 34 cents per share. It projected third-quarter revenue of $872 million to $883 million.

NetApp on Wednesday forecast fiscal fourth-quarter net income of 23 cents to 25 cents per share and earnings before certain costs of 35 cents to 37 cents per share.

Analysts, on average, have been expecting fourth-quarter net income of 28 cents per share and profit before items of 38 cents per share. (Editing by Tim Dobbyn; Editing by Andre Grenon, Gary Hill)

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