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Network Appliance Profit Tops Forecast, Shares Leap

By Reuters
Wednesday, 14 Nov 2007 | 6:47 PM ET

Network Appliance posted a better-than-expected quarterly profit and outlook on Wednesday despite worries about slow U.S. enterprise spending, sending its shares up more than 12 percent.

The data storage equipment maker said revenue growth was driven by strength in the U.S. federal sector and Europe and Asia, offsetting sluggish North American corporate spending.

"We ... felt the slowdown early, in fiscal Q1, but we actually saw a pretty good rebound around the world except for large accounts in North America, which are dominated by large financial services companies," Chief Executive Dan Warmenhoven told Reuters. "The global economy is very strong ... the weakness is concentrated in the financial services sector."

Net income was $83.8 million, or 23 cents per share, versus $86.9 million in last year's third quarter, or 22 cents per share based on a higher number of shares outstanding.

Excluding amortization of intangibles, stock-based compensation, acquisition-related costs and other items, its quarterly profit rose to $116.4 million, or 32 cents per share, from $108.9 million, or 28 cents per share, a year before.

Revenue rose 21 percent to $792.2 million in the quarter.

Analysts, on average, expected adjusted earnings of 26 cents per share and revenue of $760.3 million, according to Reuters Estimates.

The Sunnyvale, California-based company forecast third-quarter revenue of $872 million to $883 million, well above analysts' forecasts of $854.9 million.

The company said it expects net earnings of 23 cents to 24 cents per share and adjusted earnings of 33 cents to 34 cents. Wall Street was looking for net earnings of 21 cents and an adjusted 32 cents per share, according to Reuters Estimates.

Shares NetApp were up 12.4 percent at $29.90 in after-hours trade, having closed on Wednesday at $26.61 on Nasdaq.

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