Network Appliance Profit Falls on Weak U.S., European Sales
Network Appliance posted first-quarter earnings of $34.3 million, or 9 cents per share, down from $54.7 million, or 14 cents per share in the year-ago period. Revenue rose to $689.2 million, an increase of 11% compared to revenue of $621.3 million in the same quarter last year.
A Thomson Financial analyst survey had predicted per-share profit of 19 cents, on revenue of $685 million.
Network Appliance shares on Wednesday closed up 73 cents at $24.16 on the Nasdaq; after the close, the stock maintained its momentum.
"We are clearly disappointed with our revenue growth this quarter, yet confident about our underlying business strength and continued health," said Dan Warmenhoven, chief executive officer. "Our bookings growth and cash flow are both very encouraging, and we are optimistic about getting back on track for higher growth in revenue and profits going forward."
The Sunnyvale, Calif.-based company expects revenue for the second quarter (fiscal year 2008) to be between $752 million and $768 million; it forecasts earnings per share to be approximately 24 cents to 26 cents per share.
On Aug. 2, Network Appliance had lowered its first-quarter earnings forecast, citing glum sales in the U.S. and Europe. Excluding charges and one-time items, the firm predicted quarterly revenue between $684 million and $688 million; previously, it called for revenue of $745 million to $753 million.
On Aug. 3, Network Appliance was upgraded by Citigroup to "Buy" from "Hold"; but the same day, Bear Stearns downgraded the company to "Underperform" from "Peer perform." On Aug. 6, Network Appliance shares hit a new 52-week low of $22.51.
Network Appliance last week announced it had strengthened its engineering, service and support agreements with VMware; the latter is slated to be spun off from parent EMC in a hotly-awaited initial public offering.