November 17, 2010 – Over the past few weeks, analysts have opined that acquisitions such as EMC-Isilon ($2.25 billion) and HP-3PAR ($2.4 billion) spell bad news for NetApp. Maybe, but for now the NetApp juggernaut appears to be more than solid.
The company reported financial results today for its fiscal second quarter, highlighted by quarterly revenues of $1.207 billion. That’s up 33% over the same quarter a year ago. Similarly, NetApp’s revenue for the first six months of this quarter is up 34% vs. the previous year.
Net income was $165 million, or $0.42 per share, which compares to net income of $96 million, or $0.27 a share, a year ago. That’s a 72% increase year-over-year.
And gross margin was a whopping 66.9%, while operating margin was 19.8%.
The brightest spot was the company’s hardware revenues (which NetApp refers to as “product” revenue).
“NetApp produced 49% year over year growth in product revenue and our highest non-GAAP operating margin in over a decade,” said Tom Georgens, NetApp’s president and CEO. Product revenue in the second quarter was $780 million. And none of that came from the products NetApp announced a couple weeks ago as part of a wide-ranging refresh (see “NetApp overhauls product line, from arrays to OS”).
Other product lines were not so impressive. For example, software revenue was $177.9 million, up 5% year over year, and services revenue was $249.5 million, up 16% year over year.
What may raise some eyebrows is that NetApp is sitting on net cash of more than $3 billion, which will surely spark speculation on possible acquisitions that NetApp might make given the current climate of red hot M&A activity in the storage space.
Company officials predict third quarter revenue in the $1.24 billion to $1.29 billion range, which would translate into sequential growth in the 3% to 7% range.
NetApp [NASDAQ: NTAP
] shares closed at $49.25 today, down 6.5%. The company’s 52-week trading range is $28.92 to $57.96.
Trading on the company’s stock was halted this afternoon due to a leak of the earnings report prior to NetApp’s official conference. Shares plunged, apparently because investors were not pleased with the Q3 earnings estimates.
Related blog post: “NetApp hits a home run in Q1”
Related article: "NetApp overhauls product line, from arrays to OS"
Also today, scale-out NAS specialist (and NetApp competitor) BlueArc reported record third quarter revenues and a 100% quarter-over-quarter growth in channel revenues. More details were not available in time for this post. (BlueArc is a private company.)