When a person cannot deceive himself the chances are against his being able to deceive other people.– Mark Twain’s Autobiography
I found this article interesting, in light of recent articles about NetApp’s problems with its channel partners.
Warmenhoven declined to comment on whether orders from customers had recovered to normal levels after an abrupt decline in April led NetApp to forecast a 6 percent to 7 percent drop in revenue from the fiscal fourth quarter to the current first quarter.
NetApp stock is down about 22 percent since the May 23 announcement, which surprised investors accustomed to better-than-expected earnings reports from NetApp. Before May 23, the shares had been up almost 50 percent since August, 2005.
Warmenhoven said in the interview that NetApp traced the drop-off in orders to 22 of its largest customers, mainly big U.S.-based companies that failed to sign contracts before the quarter ended. Orders from government customers and large companies headquartered outside the United States remained strong in the fourth quarter, he added.
“It’s the top accounts,” Warmenhoven said. “It’s across a lot of different verticals,” or industries, including financial services and energy. “It doesn’t make a lot of sense. I’ve never seen anything like this.”
The company has cut back on hiring following the order decline, said Warmenhoven, adding about 200 employees in the current quarter compared with 400 in the fourth fiscal quarter. Still, Warmenhoven said he is optimistic about the NetApp’s prospects.
While traveling around Silicon Valley, I noticed that NetApp seems to be still building in its complex on Java Drive. So they must not be expecting the slowdown to last long.