There was an article in Saturday’s Wall Street Journal about NetApp and the problems they are having in the Federal space.
“By ROLFE WINKLER
Tech investors must be hoping the sector is merely suffering a case of the debt-ceiling sniffles. Unfortunately it may have caught recessionitis.
When storage company NetApp said Wednesday that sales hit a wall in July, it was just the latest to blame the federal government, a huge buyer of tech gear, for slowing sales. Other companies that have cited a stingy Uncle Sam for slower growth include Dell, Cisco Systems, network equipment-makers Brocade Communications and Blue Coat Systems. Hewlett-Packard also cited weak public-sector spending as a reason for its poor outlook.
Some think of NetApp as a canary in the proverbial coal mine since, in August 2007, the company surprised investors by warning of a broad slowdown in orders among big business customers. The recession began a few months later.
Notably, at that time NetApp said that the strongest parts of its business were with the U.S. federal government, as well as Germany and Northern Europe. But this time the public sector, never mind Europe, isn’t offering a backstop. Even if business customers have so far held to spending plans, William Blair analyst Jason Ader worries that government austerity will cause ripple effects on private investment as the economy slows.
The federal government isn’t the only one cutting back on tech spending. NetApp also said the financial services sector, another huge consumer of tech gear, was broadly weak. That is likely bad news for other tech firms for whom finance companies are key buyers.
NetApp cited the debt ceiling as a reason for the slowdown. So some might argue that because the crisis was resolved, growth will bounce back quickly. The Congressional supercommittee now tasked with deficit reduction might have something to say about that.”
NetApp’s hardware service and support prices remain high, and we think that is the main reason that more and more Federal NetApp Filers are being put under Zerowait Support.