Network Appliance Announces Results for First Quarter Fiscal Year 2006
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Sunnyvale, Calif. - August 17, 2005 -
Network Appliance, Inc. (NASDAQ: NTAP), the leader in advanced
networked storage solutions, today reported results for the first
quarter of fiscal year 2006. Revenues for the first fiscal quarter
were $448.4 million, an increase of 25% compared to revenues of
$358.4 million for the same period a year ago and a decrease of 1%
compared to $451.8 million in the prior quarter.
For the first fiscal quarter, GAAP net income
was $60.1 million, or $0.16 per share1 compared to GAAP
net income of $46.9 million, or $0.13 per share for the same period
in the prior year. Non-GAAP2 net income for the first
fiscal quarter was $62.1 million, or $0.16 per share, compared to
non-GAAP net income of $49.9 million, or $0.13 per share for the
same period a year ago.
"With 25% revenue growth, we continue to grow
significantly faster than the storage market and gain share. We
are pleased with the success of our new FAS3000 midrange product
line, despite the product transition issues that resulted in
revenues a little short of our expectations," said Dan Warmenhoven,
CEO of Network Appliance. "We are also encouraged by our growing
relationships with partners, particularly IBM's recent introduction
of their first product resulting from our OEM agreement."
- Network Appliance estimates that
year-over-year growth in revenue for the second quarter of fiscal
year 2006 will be in the range of 25% to 28%. This projection
reflects a quarter-over-quarter sequential growth rate of
approximately 5% to 7%.
- The company expects second quarter GAAP
earnings per share to finish between $0.17 and $0.18 per share.
Network Appliance expects second quarter non-GAAP earnings per
share to be in the range of $0.18 to $0.19 per share.
- For the full fiscal year, Network Appliance
estimates that revenues will finish in the range of 25% to 28%
higher than fiscal year 2005.
- The company expects GAAP earnings per share
for fiscal year 2006 to be between $0.74 and $0.77 per share.
Network Appliance estimates full-year non-GAAP earnings per share
to be in the range of $0.76 to $0.79 per share.
During the first quarter of fiscal year 2006, Network Appliance
extended its leadership in data protection through a definitive
agreement to acquire Decru, expanded its footprint in midrange
storage and in global service offerings, and advanced its
relationship with IBM in the virtualization and NAS markets.
In this quarter, NetApp entered into a
definitive agreement to acquire Decru, a privately held company
based in Redwood City, California, for approximately $272 million
in cash and stock. Decru, a market leader in storage security,
offers data protection solutions to address a range of needs for
enterprises and governments, including regulatory compliance,
privacy, secure consolidation, and outsourcing. Decru
DataFort™ appliances protect the core of the storage network
by seamlessly inserting a layer of strong encryption,
authentication, access controls, and compartmentalization. Since
January 2004, NetApp and Decru have worked together to deliver
solutions to customers in sectors including investment banking,
healthcare, semiconductors, software, and the federal government.
This acquisition is expected to close during the second quarter of
fiscal year 2006, subject to receipt of required regulatory
approvals and other customary closing conditions.
Also during the quarter, NetApp and IBM
announced their intention to extend their strong relationship to
encompass the growing technologies of virtualization and blade
solutions. The focus is on combining IBM's storage virtualization
technologies and the full line of NetApp V-Series and FAS storage
systems into integrated solutions, signaling the beginning of
efforts to collaborate to exploit the synergies between the
companies' respective virtualization technologies. NetApp also
announced that it plans to join IBM as one of nine founding members
in the new Blade.org industry community. The community was
conceived to enhance the relationships between the founding members
and to serve as a catalyst for the industry to create new blade
technology. NetApp is already providing back-end storage systems
for IBM eServer® BladeCenter™.
On the product front, NetApp unveiled two new
midrange storage systems -the NetApp FAS3020 and FAS3050
plus a new serial ATA (SATA) option for primary storage
applications. Concurrently, NetApp debuted two new V-Series
virtualization engines-the NetApp V3020 and V3050. These new
solutions, combined with Data ONTAP™ 7G software, address
three significant customer pain points-high storage acquisition
costs, low storage resource utilization, and increasing storage
management costs-with elegant, powerful, and scalable solutions
that help today's enterprise tailor its storage needs to its
business and data demands. The new systems also significantly
increase NetApp midrange performance.
Additionally, NetApp debuted two new midrange
NetCache systems-the NetApp C2300 and C3300-to strengthen
the company's Internet access and security solution for enterprise
data centers. The C2300 and C3300 provide more midrange deployment
options than the previous NetCache portfolio. The new systems
double NetCache price performance compared to older NetCache
NetApp maintained its leadership in the Secure
Content and Application Delivery market for the fourth consecutive
time according to IDC's3 Secure Content and Application
Delivery 2005-2009 Forecast and Analysis, IDC# 33455. According to
IDC, in 2004, NetApp captured 32.1% of the revenue market share and
maintained a leadership position with its NetCache customer
offerings, which include solutions for Internet access and
security, streaming media, and business application acceleration.
Overall, the secure content and application delivery market grew by
15% from 2003 to 2004.
In service and support, NetApp announced a new
generation of its service and support offering, ConsultingEdge,
with six packaged consulting and integration services, designed to
simplify complex storage and data management needs and speed time
to production of NetApp solutions within customers' data
infrastructures and the first support solution designed exclusively
for government agencies, SupportEdge Secure for Government. NetApp
SupportEdge Secure for Government is a highly customized service
package that provides confidential and secure assistance in the
support and management of NetApp storage solutions to both
classified and nonclassified government agencies. With this
offering, NetApp has designed a pioneering set of tools that allows
filtering of restricted or classified information from government
files prior to making them available for troubleshooting
On the partner front, NetApp unveiled several
new solution enhancements and partner offerings with Arkivio,
Decru, FileNet, Interwoven, Microsoft, SAP, and Symantec to address
a variety of data concerns including bringing scalability to ILM,
compliance, IP SAN support, content management, enhancing data
protection and consumer data security, increased data recovery, SQL
server support, enhanced storage management and other
business-critical initiatives facing enterprise customers.
In corporate news, NetApp was named by IDG's
Computerworld as one of the "100 Best Places to Work in IT." NetApp
ranked in fifth place on an impressive list of U.S. companies
spanning several industries, based on employee feedback. NetApp
also appointed Jeffry R. Allen to its board of directors. Allen
transitioned to the board from his former role as the executive
vice president of Business Operations at Network Appliance. Allen's
appointment brought the number on the Network Appliance board to
Conference Call and Webcast Information
- The NetApp quarterly results conference call
will be broadcast live via the Internet at
http://investors.netapp.com/ on Wednesday, August
17, 2005, at 2:00 p.m. Pacific Time. This press release and any
other information related to the call will also be posted to the
Web site at that location. The conference call will also be
available live in a listen-only format at (800) 299-7098 in the
United States and (617) 801-9715 outside the United States. The
passcode for both numbers is 27942294.
- A replay will be available for seven days
following completion of the live call by dialing (888) 286-8010 in
the United States and (617) 801-6888 outside the United States,
with replay code 73629016. The webcast replay will be posted on our
website for at least one year.
About Network Appliance
Network Appliance is a world leader in unified storage solutions
for today's data-intensive enterprise. Since its inception in 1992,
Network Appliance has delivered technology, product, and partner
firsts that simplify data management. Information about Network
Appliance solutions and services is available at
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1 Earnings per share represent
the diluted number of shares for all periods presented.
2 Non-GAAP results for all periods presented and the
projections in the Outlook section exclude amortization of
intangible assets, stock compensation, restructuring charges
(recoveries), net gain on investments and the related effects on
3 IDC's Secure Content and Application Delivery 2005-2009
Forecast and Analysis, IDC# 33455.
"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, statements regarding the anticipated closing of and
benefits to be derived from NetApp's pending acquisition of Decru,
and statements regarding anticipated benefits from NetApp's
relationship with IBM and other industry partners. These
forward-looking statements involve risks and uncertainties, and
actual results could vary. Factors that could impact our ability to
achieve our goals include general economic and industry conditions,
including expenditure trends for storage-related products; our
ability to deliver new product architectures and enterprise service
offerings, and our ability to design products and services that
compete effectively from a price and performance perspective;
foreign currency exchange rate fluctuations, and other important
factors as described in Network Appliance, Inc.'s reports and
documents filed from time to time with the Securities and Exchange
Commission, including our most recently submitted 10-K and
Network Appliance 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 operational
performance. In addition, these non-GAAP financial measures
facilitate management's internal comparisons to the Company's
historical operating results and comparisons to competitors'
operating results. We include these non-GAAP financial measures in
our earnings announcement because we believe they are useful to
investors in allowing for greater transparency with respect to
supplemental information used by management in its financial and
operational decision making such as employee compensation planning.
In addition, 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.
Network Appliance, Inc.
Ph: (408) 822-3974
Network Appliance, Inc.
Ph: (408) 822-6909
Network Appliance, Inc.
Ph: (408) 822-6428