NetApp: We're Not Afraid of EMC
NetApp (NASDAQ: NTAP) posted much stronger than expected quarterly results late yesterday and said it isn't worried about a new partnership between rival EMC (NYSE: EMC) and Cisco (NASDAQ: CSCO) and VMware (NYSE: VMW).
NetApp reported a slight revenue decline from the year-ago quarter to $910 million but that was nearly $30 million better than Wall Street analysts anticipated (see Analysts Expect Strong Earnings from NetApp, Brocade).
The data storage vendor also posted better than expected earnings, and said it will return to year-over-year growth in the current quarter.
"With the overall economy appearing to stabilize, we are seeing more and more customers begin to have forward-looking discussion again," CEO Thomas Georgens said on the company's conference call. "Rather than just figuring out how little they need to buy in order to fulfill a near-term demand, they are now starting to talk about their next-generation virtualized data center architectures."
Georgens didn't seem too worried about the new Cisco-EMC-VMware partnership on the call.
"[A]t the end of the day, this relationship doesn't produce anything for the customer, and to be perfectly honest, I think what Cisco is going to find is once they move away from EMC's stronghold accounts, they are going to find that their transforming is hindered by EMC," Georgens said. "[T]he goal that I have given our team is that I want to form the same relationship with Cisco that we have with VMware."
He also said a new partnership with Fujitsu will be bigger than NetApp's relationship with IBM (NYSE: IBM).
"Fujitsu is multi-hundred million dollar partner of ours and I think that this represents a very, very interesting relationship for us going forward, and it gives them an opportunity to streamline their storage story and allows them to have a single story worldwide around storage," Georgens said.
Analysts were upbeat following NetApp's results.
In a research note today, Broadpoint AmTech analyst Brian Marshall said, "We believe NTAP remains a fast-growing, well-positioned midrange player in the enterprise storage space with an extremely cost-effective solution. Furthermore, with its solid position in virtual environments, it is our view NTAP will continue to gain share in enterprise storage as market adoption of virtualization accelerates in the future."
Baird analysts Jayson Noland and Sonya Banerjee wrote, "We are positive on NTAP shares in front of what we believe will prove to be a strong C10 for IT hardware in general and enterprise storage specifically."
NetApp shares were on the rise today despite a big stock market sell-off, thanks to the company's strong results.
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