UPDATE 1-NetApp results beat estimates as cloud focus pays off

20 Aug 2015 | Author: | No comments yet »

NetApp Climbs After Forecast Tops Estimates on Storage Demand.

NetApp Inc. SUNNYVALE, Calif. – Shares of NetApp climbed in aftermarket trading Wednesday after the data storage company reported solid fiscal first-quarter results and gave an upbeat outlook for its current quarter.NetApp NTAP, -1.65% shares, which initially jumped as high as 15%, rose 5.1% to $31.30 on heavy volume after the company reported adjusted quarterly earnings of 29 cents a share, when analysts were expecting 23 cents a share. NTAP -1.65 % swung to a loss in the first quarter as product revenue dropped sharply amid a major product overhaul and the data-storage company logged $27 million in costs tied to a previously announced restructuring.

Shares of the company are trading at their lowest prices since late 2012, and they advanced $2.06, or 6.9 percent, to $31.84 in the aftermarket session. Company officials, who called this a transition year, said product revenue would pick up in the second quarter and return to its target operating margin of 8% to 20% in the second half of the year. “The IT industry as a whole is going through fundamental change as enterprises transform themselves with digital capabilities. George Kurian, who was appointed as NetApp’s chief executive officer in June, is seeking to turn around the provider of hardware, software and services for storing data, which has seen shrinking sales for the past seven quarters.

NetApp has been struggling as consumers shift toward cloud storage, according to Bloomberg Intelligence analysts. “We are pivoting to better address the changing industry, to improving our own execution and to enhancing value for our shareholders,” Kurian said Wednesday in a statement. The Sunnyvale, California-based company it expects adjusted income of 55 cents to 60 cents on $1.4 billion to $1.5 billion in revenue in the fiscal second quarter. Kurian, who previously oversaw strategy and development of the company’s product and solutions portfolio, became the chief executive in June, less than two weeks after the Silicon Valley company said it would lay off 500 workers, or about 4% of its global workforce. HD, -0.03% flirted with a fresh record high but closed lower after the Dow component posted same-store sales that outstripped average analysts’ estimates. SPLS, -0.21% posted second-quarter quarterly results that were largely in line with analysts projections but its slumping sales may have unsettled investors.

LOW, +1.85% reported second-quarter profit that missed an average estimate from analysts polled by FactSet, but the home-improvement giant showed growth in sales.

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