Earnings Preview: NetApp

NetApp (NTAP) is expected to report Q2 earningsafter market close Wednesday Nov. 12, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 27c for EPS and $904.58M for revenue, according to First Call. Guidance provided on the last earnings call was for EPS of 27c to 30c on revenue of $910M to $940M.

Analyst Views

Based on Morgan Keegan's checks, it believes NetApp posted a relatively in-line October quarter paced by continued performance in the U.S. Distribution channel, Federal sales, and International business. Keegan's checks yielded wildly variant reads on the U.S. direct business with performance showing a wide range based on geography and industry segment. Looking ahead, the firm is doubtful that management will provide guidance beyond the January quarter. Yet, despite the uncertainty of the macro environment, the firm expects NetApp will be able to deliver both sequential and YoY revenue growth for the January and April quarters.

RBC Capital recently lowered its estimates to 25c on $900M in revenues, as it believes bookings were significantly below plan for the quarter, and it assumes that some of the backlog carried over from the July quarter was burned to deliver October quarter results.

NetApp's CEO has referenced a major reduction in hiring plans, and we would not be surprised to see a quiet headcount reduction in the coming quarters.