NetApp (NASDAQ:NTAP) which experienced a slow quarter last time around is set to announce its Q2 results on November 14. Cautious IT spending and the slowdown in Europe weighed on the storage products maker in Q1 as net revenue for the first quarter was $1.44 billion, down 15% q-o-q and 1% y-o-y. Product revenue took a hit as it declined 23% sequentially and 7% annually at $898 million. Service revenue however showed robust y-o-y growth of 11% to $328 million.
For the upcoming quarter, the company has guided for revenues in the range of $1.5-$1.6 billion and EPS of $0.45-$0.5. NetApp is involved in designing solutions for storing, managing and protecting business data through enterprise storage and data management software as well as hardware products and services.
Cloud Storage, Big Data And StorageGRID Key for 2013
Last quarter, NetApp’s product revenues took a hit due to seasonality and macroeconomic factors, but hardware maintenance contracts showed robust growth. This means that companies are steering clear of investing in new IT infrastructure until macroeconomic conditions become favorable. We expect product revenues to catch up this quarter helped by seasonality and as companies move away from traditional computing environments to cloud computing which will drive storage demand.
On the software front, we expect NetApp’s popular StorageGRID software to drive revenues. It now comes with the Cloud Data Management Interface (CDMI) standard. This is developed by the Storage Networking Industry Association (SNIA) and involves the interaction of applications with cloud storage. It covers activities such as creation, retrieval and deletion of data elements from the cloud and is an open standard for self-provisioning and accessing cloud storage. This is a shift away from proprietary APIs and interfaces that tie clients to their storage vendors as CDMI is a more open approach aimed at reducing vendor dependability.
In essence, a company can change cloud storage vendors easily and is not dependent on a single vendor. Currently, NetApp is one of the few large storage vendors that supports the standard, and we expect this to drive its revenues as it will be able to better manage the storage needs of its clients. Notes: