NetApp Posts $7 Million Net for Fiscal Q3

The Network-attached storage maker also reported $198.3 million in revenues Tuesday, inching up from its second quarter sales of $194.7 million.

Network-attached storage maker Network Appliance Inc. reported $198.3 million in its fiscal third-quarter revenues Tuesday, inching up from its second quarter sales of $194.7 million.

"The Q3 results reflect Network Appliances strong operational performance in a challenging market," CEO Dan Warmenhoven said through a press statement. "We made across-the-board progress in our enterprise initiatives, we broadened our vertical market and strategic partnership focus, expanded our worldwide customer mix and grew our product line. As a company, we continue to be focused."

NetApp, as the Sunnyvale, Calif., vendor is commonly known, reported a net income of $7 million, or 2 cents per share, for its third quarter, compared with $34.1 million or 9 cents per share for the same period last year.

The company currently has 2200 employees and $655 million in cash and investments, Warmenhoven said during the call.

"We saw good traction with IBM Global Services" in the caching niche, and other success in administration software and vertical markets, he said.

In addition he said: "Wed like to thank Microsoft...for clarifying" the recent issue of NetApp compatibility with Microsoft Corp.s Exchange messaging system.

Looking forward, the NAS vendor faces an increasingly tough market. Its high-end products are threatened by massive rival EMC Corp., which sells NAS systems via partner Dell Computer Corp., and which also makes directed-attached storage hardware and management software, and by high-performance specialist BlueArc Corp.

Microsofts Server Appliance Kit, Veritas Software Corp.s ServPoint product and similar products from smaller companies like MTI Technology Corp., equally threaten NetApps mid-market and low-end products, industry watchers note. Nevertheless, NetApp has an edge in vertical markets sales, they said.

"I dont think its a matter of who distributes it, I think its earned a very bad reputation on its own," Warmenhoven said of the EMC/Dell NAS relationship. "Id love to have a bakeoff... weve replaced many of them. I dont think [Dell] will be effective in our world."