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Network storage provider NetApp (Nasdaq: NTAP) exemplified the ever-increasing commercial interest in cloud computing data storage May 25 by reporting better-than-expected quarterly results.
The Sunnyvale, Calif.-based company reported fiscal Q4 revenue of $1.428 billion, up 22 percent and surpassing the $1.387 billion expected, according to a group of Thomson Reuters analysts.
Net profit for the quarter ended April 29 rose to $160.6 million, or 40 cents a share, from $145.1 million, or 40 cents a share, a year earlier. Excluding items, NetApp earned 59 cents per share. Analysts had expected earnings of 53 cents per share.
Steady demand for its data storage products in the face of stiff competition from external storage market leader EMC and others sent its shares up 7 percent in after-hours trading to $55.73 by 3 p.m. EST.
“We achieved the largest market share gains in our history and closed a record number of million dollar deals,” CEO Tom Georgens (pictured) said in a statement released after the Nasdaq closing bell.
In fiscal 2011, NetApp piled up revenue of $5.12 billion, a notable improvement over the company’s 2010 total of $3.93 billion. Wall Street analysts had projected $5 billion.
“They’ve (NetApp) been taking share from the big-box hardware companies,” Collins Stewart analyst Louis Miscioscia told Reuters. “The results look very good.”
Georgens told Reuters that NetApp will continue to make acquisitions to keep its expansion moving.
Earlier this month, NetApp completed the purchase of microchip maker LSI Corp’s Engenio external storage system business for $480 million to help it expand in the rapidly growing bandwidth-intensive video and HPC (high-performance computing) markets.
Dividends Not the Only Reward
“I don’t feel compelled to give cash back in the form of dividends, and things like that, as a way to stimulate shareholder return,” Georgens, a former CEO of LSI Engenio, said.
“I think a better way to provide that shareholder return is to deploy that money strategically, especially now that we’re still growing.”
NetApp has gained market share from other competitors, moving from No. 5 in corporate data storage equipment to No. 3 behind EMC and IBM, market researcher IDC reported in its quarterly data storage tracker.