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NetApp revenues and profits decline again despite positive spin

But it's moving forward with clarity and speed in the data-powered digital era...

Despite its CEO saying NetApp was moving forward with clarity and speed in the data-powered digital era, NetApp recorded lower revenues and profits on the annual compare for its second fiscal 2016 quarter, ended October 20. Same old, same old.

Revenues for the quarter were $1.45bn, six per cent down on the year-ago quarter’s $1.54bn, and eight per cent more than the first fiscal 2016 quarter. Unlike that quarter when NetApp made a $30m loss, this quarter saw a $114m profit, 29 per cent lower than a year ago.

There were encouraging signs compared to the previous quarter. Product revenue of $815m was up 23 per cent quarter-over-quarter, all-flash FAS units grew 246 per cent quarter-on-quarter, and flash capacity grew 80 per cent over the same period. But we should remember NetApp’s second quarter is seasonally higher in revenue terms than its first quarter, so let’s not get carried away.

CEO George Kurian referred to NetApp pivoting to growth in his prepared remarks, saying: “Our Q2 results reflect the progress we are making to pivot NetApp for long-term growth in the data powered digital era. We are moving forward with clarity and speed to better address the changing industry and improve our own execution.”


NetApp quarterly results to Q2 fy2016. Click chart for larger view

The “data-powered digital era” concept must have pleased the marcom flack who composed that phrase.

Kurian expressed measured optimism: “Customer wins and partner feedback drive my strong conviction that our industry-leading portfolio and differentiated Data Fabric strategy will expand our opportunity and drive long-term growth.”

Next quarter’s revenues are expected to be flat, $1.45bn again at the mid-point of the $1.40 – $1.50bn range. That would be a 6.5 per cent decline on the year-ago Q3. That doesn’t look like NetApp is moving forward with any speed at all. Instead it's pretty much expecting its tenth successive quarter of declining revenues. For the moment it's moving backwards, not forwards. Is that clarity enough? ®


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