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Network storage systems manufacturer Network Appliance issued Q1 guidance below Street forecasts on Wednesday, sending its shares down 21% to $30.02 in AH trading -- their steepest drop in over six years. The company is projecting Q1 EPS of $0.14-0.15. Excluding items, earnings are forecast in the $0.24-0.25 range, below a consensus estimate of $0.31. The company is also expecting a 6-7% sequential decline in Q1 sales on lower capital spending by large U.S. companies. That forecast implies revenue of $745.1-753.1 million, short of analyst expectations of $814.4 million. "It just took longer to close deals in the second half of the quarter," said CEO Daniel Warmenhoven. The disappointing Q1 guidance overshadowed the company's Q4 results, which were also reported Wednesday. Q4 net income was up 51% to $89.6 million ($0.23/share) from $59.2 million ($0.15) in the year-ago quarter. Revenue rose 34% to $801.2 million against analyst expectations of $798.1 million. Excluding items, Q4 EPS were $0.30, in line with the company's previous forecast and analyst estimates.

Sources: Network Appliance F4Q07 Earnings Call Transcript, MarketWatch, Bloomberg, Forbes, Reuters
Commentary: Network Appliance: Choosing Growth Over EarningsNetApp Acquires Topio To Complement Its Enterprise Data Storage Business
Stocks/ETFs to watch: Network Appliance, Inc. (NASDAQ:NTAP). Competitors: EMC Corp. (NYSE:EMC), Hewlett-Packard Co. (NYSE:HPQ), International Business Machines Corp. (NYSE:IBM). ETFs: PowerShares Dyn Hardware&Con Electronics (PHW), Internet Architecture HOLDRs (NYSE:IAH)

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Source: Network Appliance Guides Q1 Below Forecasts; Shares Plummet