NetApp forecasts adjusted earnings above estimates

Reuters News
Posted: Feb 13, 2013 4:12 PM

By Chandni Doulatramani

(Reuters) - Data storage equipment maker NetApp Inc reported third-quarter results that beat market estimates on growth in its services business, and forecast current-quarter adjusted earnings above expectations.

The company expects adjusted earnings of 65 cents to 70 cents per share on revenue of between $1.70 billion and $1.80 billion for the fourth quarter.

Analysts were expecting adjusted earnings of 65 cents per share on revenue of $1.75 billion, according to Thomson Reuters I/B/E/S.

Revenue from services rose 14 percent to $340.8 million in the third quarter, while sales in its core equipment business, which contributes about 70 percent to revenue, was marginally lower at $1.06 billion.

The services business includes hardware maintenance, professional and training.

Sales at its unbranded business fell 17 percent in the quarter, Chief Executive Tom Georgens told Reuters. The business caters to original equipment manufacturers (OEMs).

Georgens also flagged concerns on the debt crisis in Europe and U.S. federal spending.

"We need to be careful (about macro-economic conditions) ... We still have some concerns on Europe," Georgens said.

Europe, Middle East and Africa (EMEA) contributed about 30 percent to total sales of $6.23 billion for the year ended April 27, 2012.

The company's net income rose to $158 million, or 43 cents per share, in the third quarter, from $120 million, or 32 cents per share, a year earlier.

Revenue rose about 4 percent to $1.63 billion.

Excluding items, the company earned 67 cents per share.

Analysts had expected adjusted earnings of 56 cents per share on revenue of $1.62 billion.

The company's shares, which have gained more than 30 percent in the last three months, closed at $35.82 on the Nasdaq on Wednesday.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Sriraj Kalluvila)