NetApp (NASDAQ:NTAP) is set to announce its Q4 earnings on May 23. We expect the revenue growth momentum that the company has witnessed over the past few quarters to continue this quarter as well. However, a supply shortage of hard disk drives (HDDs) and a resulting price increase may put pressure on its margins. NetApp is involved in designing solutions for storing, managing and protecting business data through enterprise storage and data management software and hardware products and services. Its main competitors are HP (NYSE:HPQ) and EMC (NYSE:EMC).
See our full analysis on NetApp
The company expects fourth quarter revenues of $1.69 billion, up 15% y-o-y. EPS is expected to be $0.63, up from $0.59 a year ago. NetApp expects full year revenue to come in at $6.22 billion. In the past four quarters, the company has seen a double digit growth in revenues on a year-on-year basis, and we expect the trend to continue this quarter as well. NetApp reported a 28.8% y-o-y increase in revenue in the fourth quarter of last fiscal. The company has reported consistent profits for the past eight quarters with EPS having risen by about 6%, on average.
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Supply Shortage And Higher Prices Likely To Hurt Margins
Western Digital and Seagate, the largest suppliers of HDDs from Thailand, have experienced a significant shortage in HDD supply during the first half of 2012, which has resulted in higher costs.  NetApp has said that it can no longer absorb cost increases, as it will mean compromising its margins. The supply shortage and price increases will likely impact its sales and margins in the short term.
We currently have a $56.43 Trefis price estimate for NetApp, which is about 70% higher than its market price.Notes: