NetApp Q3 Profit Up 22%, Beats View; But Revenues Miss

(RTTNews) - Data-storage systems maker NetApp Inc. (NTAP) on Wednesday reported a profit for the third quarter that increased 22 percent from last year and beat analysts' estimates, helped by better margins and lower expenses. However, revenue for the quarter declined and missed analysts' expectations.

Looking ahead, the company forecast earnings for the fourth quarter in line with Street expectations, but provided revenue outlook below their estimates.

Sunnyvale, California-based NetApp's net income for the third quarter was $192.1 million or $0.55 per share, up from $158.1 million or $0.43 per share in the year-ago period.

Excluding items, adjusted earnings for the quarter were $260.6 million or $0.75 per share, compared to $242.7 million or $0.67 per share in the prior-year quarter. On average, thirty seven analysts polled by Thomson Reuters expected the company to report earnings of $0.71 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the third quarter declined 1 percent to $1.61 billion from $1.63 billion in the prior-year period. Analysts had a consensus revenue estimate of $1.63 billion for the quarter.

Product revenue for the quarter decreased 4 percent from the year-ago period to $1.02 billion, while software entitlements and maintenance revenues edged down less than 1 percent to $227.0 million. Service revenues grew 8 percent to $368.0 million.

Adjusted gross margin for the second quarter improved to 63.5 percent from 60.4 percent in the same period last year, while total operating expenses declined slightly to $775.6 million.

Looking ahead to the fourth quarter, NetApp forecasts net earnings in a range of $0.57 to $0.62 per share, adjusted earnings of $0.77 to $0.82 per share, and revenue of $1.62 billion to $1.72 billion. Analysts currently expect the company to earn $0.80 per share for the quarter on revenues of $1.73 billion.

NTAP closed Wednesday's regular trading session at $41.59, down $1.10 or 2.52 percent on a volume of 9.31 million shares. In after hours, the stock further declined $1.37 or 3.22 percent to $41.22.