Sunnyvale, Calif. - November 17,
2010 - NetApp (NASDAQ: NTAP) today
reported results for the second quarter of fiscal year 2011, which
ended October 29, 2010. Revenues for the second fiscal quarter of
2011 totaled $1.207 billion compared to revenues of $910 million
for the same period a year ago, an increase of 33% year over
For the second quarter of fiscal year 2011,
GAAP net income was $165 million or $0.42 per share compared to GAAP net income of $96
million, or $0.27 per share for the same period a year ago.
Non-GAAP net income for the second quarter of fiscal year 2011 was
$203 million, or $0.52 per share, compared to non-GAAP net income of $130 million,
or $0.37 per share for the same period a year ago.
Revenues for the first six months of fiscal
year 2011 totaled $2.345 billion compared to revenues of $1.748
billion for the first six months of the prior fiscal year, an
increase of 34% year over year.
GAAP net income for the first six months of
fiscal year 2011 totaled $306 million, or $0.80 per share, compared
to GAAP net income of $147 million, or $0.43 per share for the
first six months of the prior fiscal year. Non-GAAP net income for
the first six months of fiscal year 2011 totaled $385 million, or
$1.01 per share, compared to non-GAAP net income of $206 million,
or $0.60 per share for the first six months of the prior fiscal
"NetApp produced 49% year over year growth in
product revenue and our highest non-GAAP operating margin in over a
decade, while simultaneously investing aggressively in our future,"
said Tom Georgens, president and CEO of NetApp. "Last week, the
NetApp team delivered the most comprehensive product launch in our
history. By offering customers a more flexible and efficient
alternative to traditional storage, NetApp further strengthened our
leadership position as the platform of choice for the next
generation of IT infrastructure."
- NetApp estimates revenue for the third quarter of fiscal year
2011 to be in the range of $1.240 billion to $1.290 billion, which
equates to approximately 3% to 7% sequential revenue growth and
approximately 23% to 28% year over year revenue growth.
- NetApp estimates that third quarter fiscal year 2011 GAAP
earnings per share will be approximately $0.39 to $0.41 per share.
NetApp estimates that the third quarter fiscal year 2011 non-GAAP
earnings per share will be approximately $0.48 to $0.50 per
- NetApp estimates share count for the third quarter of fiscal
year 2011 will increase to approximately 408 million shares,
including an estimated 16.9 million shares from the Company's
outstanding convertible notes and 9.9 million shares from outstanding warrants.
Share count does not include the Company's outstanding note hedges
that are expected to offset 80% of the dilution from the
convertible notes at maturity or conversion, which would equate to
an offset of approximately 13.5 million shares if the conversion or
maturity occurred in the third quarter.
In the second quarter of fiscal year 2011, NetApp introduced new
solutions and expanded support and integration with key partners
such as VMware to help customers accelerate their move to a more
integrated, efficient, and flexible shared IT infrastructure. In
addition, NetApp achieved several milestones and was honored as a
best place to work and one of the most trusted and strategic IT
vendors in the industry. Key business highlights included the
NetApp and Partners Deliver Flexible
and Efficient IT
- NetApp and VMware® improve IT efficiency.
NetApp made several announcements with VMware to enable customers
to achieve greater efficiency in their virtual environments. NetApp
integrated its unified storage technologies with VMware®
View™ to help customers enhance storage efficiency and
virtual desktop scalability, as well as improve performance levels.
NetApp also announced support for VMware vCloud™ Director
software to improve IT flexibility and efficiency and help
enterprise customers and service providers to easily and
cost-effectively evolve to a cloud service model. In addition,
NetApp and VMware unveiled a new solution for midsize enterprises
to consolidate and virtualize their Windows® environments to
deliver enterprise-class IT as a service.
- Fujitsu and NetApp help customers gain greater IT value
and efficiency. Fujitsu and NetApp extended their strong,
long-standing global partnership to offer a shared portfolio of
products to meet the integrated storage needs of their customers.
Fujitsu will expand its resale of NetApp® unified storage
systems to more markets worldwide. In addition, NetApp will resell
the Fujitsu ETERNUS CS800 S2 Data Protection Appliance in 22
countries across EMEA.
- NetApp strengthens integration with Symantec to boost
customers' IT efficiency. NetApp integrated its unified
storage systems with the Symantec™ Thin Reclamation API to
help SAN customers automatically reclaim storage space and improve
overall storage efficiency. Customers can improve planning and
reduce their overall IT footprint and management costs.
- NetApp helps EMC and HP customers achieve greater
efficiency. NetApp introduced its Zero Investment Promise
(ZIP) for Database Promotion to assist EMC and HP customers in
achieving greater storage efficiencies in their database
environments. The promotion enables EMC and HP customers to reduce
storage requirements, improve utilization, and decrease operating
costs by engaging in a 90-day, risk-free, zero-investment trial of
NetApp V-Series for their database storage infrastructures.
Milestones and Awards
- NetApp customers deploy thousands of systems with Data
ONTAP® 8. To help transition to a shared IT
infrastructure, customers accelerated their adoption of NetApp Data
ONTAP 8 by deploying thousands of systems to build flexible,
scalable, and efficient shared storage environments that are
designed to address today's business challenges and the future
requirements of their businesses.
- NetApp ranked #1 hardware vendor and #2 overall IT
vendor. NetApp was ranked as the #1 hardware vendor and #2
(tied with Cisco) overall IT vendor in the 2010 CIO Insight Vendor
Value Ratings survey.
- NetApp positioned in Leaders quadrant.
Gartner, Inc. positioned NetApp in the Leaders quadrant for Storage
Resource Management and SAN Management Software. Gartner asserted that vendors in
the Leaders quadrant "have the highest combined measures of Ability
to Execute and Completeness of Vision."
- NetApp ranked #1 best place to work. NetApp
was ranked #1 on the Triangle Business Journal's annual "Best
Places to Work" in Research Triangle Park (RTP) list for 2010.
NetApp received this honor for the Giant Businesses category, which
includes companies of 1,000 employees or more; it marks the sixth
time that NetApp has made this distinguished list and the second
time it has been ranked #1.
Webcast and Conference Call
The NetApp second quarter fiscal year 2011 results conference call
will be broadcast live on the Internet at investors.netapp.com on Wednesday, November 17, 2010,
at 2:00 p.m. Pacific Time. This press release and any other
information related to the call will also be posted on the Web site
at that location. An audio replay Webcast will also be available
after 4:00 p.m. Pacific Time on our Web site.
NetApp uses a hybrid format for disclosing
key financial information associated with our quarterly results.
Concurrent with the press release, NetApp will post and distribute
a separate document with financial commentary and statistics. These
prepared remarks will be available prior to the conference call in
order to provide the investment community with additional time to
analyze our results. This commentary will not be read during the
NetApp creates innovative storage and data management solutions
that deliver outstanding cost efficiency and accelerate business
breakthroughs. Discover our passion for helping companies around
the world go further, faster at www.netapp.com/it.
NetApp, the NetApp logo, Go further, faster,
and Data ONTAP are trademarks in the United States and other
countries. All other trademarks are the property of their
"Safe Harbor" Statement Under U.S.
Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements include all of the statements under the Outlook
section relating to our forecasted operating results, share count,
and metrics for the third quarter of fiscal year 2011, expectations
regarding current and new partnerships and strategic alliances, and
the benefits that we expect our customers to realize from using our
products and from our strategic alliances and partnerships. These
forward-looking statements involve risks and uncertainties, and
actual results could vary. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include, but are not limited to,
customer demand for our products and services including our
recently announced new product introductions; our ability to
increase revenue and manage our operating costs; increased
competition risks associated with the anticipated growth in
networked storage market; general economic and market conditions;
our ability to deliver new product architectures and enterprise
service offerings; our ability to design products and services that
compete effectively from a price and performance perspective; our
reliance on a limited number of suppliers; our ability to
accurately forecast demand for our products; and other important
factors as described in NetApp reports and documents filed from
time to time with the Securities and Exchange Commission (SEC),
including the factors described under the sections captioned "Risk
Factors" in our most recently submitted 10-K and 10-Q. We disclaim
any obligation to update information contained in these
forward-looking statements whether as a result of new information,
future events, or otherwise.
NetApp Usage of Non-GAAP
The Company refers to the non-GAAP financial measures cited above
in making operating decisions because they provide meaningful
supplemental information regarding the Company's ongoing
operational performance. Non-GAAP net income excludes the
amortization of intangible assets, stock-based compensation
expenses, acquisition related income and expenses, restructuring
and other charges, asset impairments, non-cash interest expense
associated with our convertible debt, net losses or gains on
investments, and our GAAP tax provision, but includes a non-GAAP
tax provision based upon our projected annual non-GAAP effective
tax rate for the first three quarters of the fiscal year and an
actual non-GAAP tax provision for the fourth quarter of the fiscal
year. We have excluded these items in order to enhance investors'
understanding of our ongoing operations. The use of these non-GAAP
financial measures has material limitations because they should not
be used to evaluate our company without reference to their
corresponding GAAP financial measures. As such, we compensate for
these material limitations by using these non-GAAP financial
measures in conjunction with GAAP financial measures.
These non-GAAP financial measures are used
to: (1) measure company performance against historical results, (2)
facilitate comparisons to our competitors' operating results, and
(3) allow greater transparency with respect to information used by
management in financial and operational decision making. In
addition, these non-GAAP financial measures are used to measure
company performance for the purposes of determining employee
incentive plan compensation. We have historically reported similar
non-GAAP financial measures to our investors and believe that the
inclusion of comparative numbers provides consistency in our
financial reporting at this time.
GAAP earnings per share is calculated using the diluted number of
shares for all periods presented.
 Non-GAAP net income
excludes the amortization of intangible assets, stock-based
compensation expenses, acquisition related income and expenses,
restructuring and other charges, asset impairments, non-cash
interest expense associated with our convertible debt, net losses
or gains on investments, and our GAAP tax provision, but includes a
non-GAAP tax provision based upon our projected annual non-GAAP
effective tax rate for the first three quarters of the fiscal year
and an actual non-GAAP tax provision for the fourth quarter of the
fiscal year. Non-GAAP earnings per share is calculated using the
diluted number of shares for all periods presented.
 80% hedged on maturity
or conversion of the convertible notes.
 Gartner, Inc. Magic
Quadrant for Storage Resource Management and SAN Management
Software, Valdis Filks, Robert E. Passmore, September 21, 2010.