NetApp announces results for second Quarter of fiscal year 2010

NetApp reported results for the second quarter of fiscal year 2010, which ended October 30, 2009. Revenues for the second quarter of fiscal 2010 were $910 million, compared to revenues of $912 million for the same period one year ago.

For the second fiscal quarter of 2010, GAAP net income was $96 million, or $0.27 per share1 compared to GAAP net income of $43 million, or $0.13 per share for the same period in the prior year. Non-GAAP2 net income for the second fiscal quarter of 2010 was $130 million, or $0.37 per share, compared to non-GAAP net income of $92 million, or $0.28 per share for the same period one year ago.

Revenues for the first six months of the current fiscal year totaled $1.75 billion, compared to revenues of $1.78 billion for the first six months of the prior fiscal year, a decrease of 2% year over year.

GAAP net income for the first six months of the current fiscal year totaled $147 million, or $0.43 per share, compared to GAAP net income of $78 million, or $0.23 per share for the first six months of the prior fiscal year. Non-GAAP net income for the first six months of the current fiscal year totaled $206 million, or $0.60 per share, compared to non-GAAP net income of $168 million, or $0.50 per share for the first six months of the prior fiscal year.

"NetApp delivered a strong quarter with record gross margins, record revenue from our SAN products, and overall revenue that exceeded our expectations," said Tom Georgens, president and chief executive officer. "Our value proposition resonates particularly well with customers who look to gain efficiency and streamline operations as they begin to build out their next-generation virtualized data centers. Driven by this demand, NetApp is forecasting record revenues for our next fiscal quarter."

Outlook

 NetApp estimates revenue for the third quarter of fiscal year 2010 to be in a range of $935 million to $955 million.

 NetApp estimates the third quarter of fiscal year 2010 share count to increase by about 5 million shares.

 NetApp estimates that the third quarter of fiscal year 2010 GAAP earnings per share will be approximately $0.24 to $0.25 per share. NetApp estimates third quarter fiscal year 2010 non-GAAP earnings per share to be approximately $0.36 to $0.37 per share.

Quarterly Highlights

In the second quarter of fiscal year 2010, NetApp unveiled its cloud strategy and introduced several new products and solutions to help customers transform their data center architectures to achieve greater storage efficiency through innovative data management techniques. NetApp also received numerous industry accolades for its work environment, products, innovative use of technology, and executive leadership.

The makeup of the data center is changing drastically as companies seek to take advantage of virtualization and highly efficient infrastructures. NetApp is primed to take advantage of this major shift in the market by offering enterprises industry-leading storage efficiency and data management solutions that are well suited for both internal and external cloud deployments.

This quarter NetApp introduced Data ONTAP® 8, the culmination of years of engineering effort to integrate the Data ONTAP 7G operating system with a next-generation scale-out architecture. Data ONTAP 8 will provide seamless data mobility and secure multi-tenancy, both of which are key requirements for the most sophisticated cloud infrastructures. In addition, Data ONTAP 8 provides a more robust platform for the next 10 years of innovation from NetApp.

NetApp also introduced the following new products and enhancements that uniquely complement VMware® vSphere 4 and VMware View to help customers optimize their desktop and cloud computing environments: Virtual Storage Console, SnapManager® for Virtual Infrastructure, and Rapid Cloning Utility.

Showing its commitment to midsize enterprise and distributed enterprise customers, NetApp announced the new FAS2040 storage system, providing customers with increased performance and capacity to handle demanding Microsoft® Windows® consolidation and virtualization workloads all on the same system. NetApp also announced significant price reductions for its FAS2020 systems and associated software, which are now preconfigured with high-capacity drives and include all protocols.

During the quarter, NetApp extended its leadership in Ethernet storage with standards-based products that support converged Ethernet (FCoE, iSCSI, NFS, CIFS) data access and help customers streamline their data centers and maximize ROI. With partners such as Cisco and QLogic, NetApp is expanding Ethernet as a storage infrastructure.

In an effort to help customers maximize the value of their existing storage investments, NetApp unveiled a program to help customers achieve greater storage efficiency in their data centers. Under the terms of the Zero Investment Promise3 Program ("ZIP Program"), customers with EMC and HP SANs that deploy NetApp® V-Series can reduce storage capacity and the associated costs of their existing third-party storage investments. If after 90 days the customer files an approved claim that the storage savings are not achieved, the customer will keep the equipment at no charge.

Finally, in addition to NetApp's various solution and program announcements during the quarter, the company received the following awards and industry recognition:

• Best Channel Product 2009: The NetApp FAS2000 series was named a "Best Channel Product 2009" in the NAS Storage category by Business Solutions magazine. The FAS2000 was cited for its reliability, durability, and ease of upgrade.

• 2009 InformationWeek 500: NetApp ranked 26th on the 2009 InformationWeek 500, which honors the nation's most innovative users of information technology. NetApp ranked number three in the information technology industry.

• Oracle Innovation Award: Recognizing NetApp's innovative use of Oracle® Business Intelligence software, Oracle named NetApp a winner of the 2009 Innovation Awards in the Business Intelligence/Enterprise Performance Management category.

• Morgan Stanley Leadership Award for Global Commerce: Dan Warmenhoven and Tom Mendoza received the Morgan Stanley Leadership Award for Global Commerce, which recognizes individuals whose personal leadership has made a critical contribution to the effective use of information technology throughout the world.

• Washingtonian Magazine's 50 Great Places to Work: NetApp was selected as a winner in the "Think Big" category, for large companies, on the basis of such measures as recognition and respect given employees, great work-life balance, challenging and interesting opportunities, commitment to community, and generous pay and benefits.