Earnings Preview: NetApp

NetApp (NTAP) is expected to report Q1 earnings after market close Wednesday, Aug. 13,  with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 22c for EPS and $861.60M for revenue, according to First Call.

Analyst Views

The company provided what analysts perceived as lower guidance on the last earnings call. Management guided to Q1 EPS of 20c to 23c on revenue of $845M to $875M. Citigroup's checks within the quarter with direct and indirect channels, point to July revenue strength across both products and services. The firm said that this should support revenue at the high-end or above the guidance range vs. Citigroup's estimate of $875M. Citigroup said that with approximately $600M in backlog entering the year and the strong July, guidance for Q2 should provide upside vs. consensus expectations of $918M and potentially Citigroup's $924M estimate. Citigroup said EPS is more difficult, given the sizable headcount build over the last two quarters and share creep with the stock appreciation. The firm believes the high end of the 20c to 23c range is achievable, albeit slightly below Citigroup's 24c.

All eyes will be on operating margins, given the approximate 1,000 heads added over the last two quarters. Guidance calls for 1H/2H Operating Margin of 11% to 16%, weaker in Q1 and building through the year. Citigroup is modeled at 1H of 10.8%, 2H of 16.1%, or quarterly 9.7%, 11.9%, 14% and 17.9%, for quarters one through four. Consensus estimates for Q3 and FY09 are: 30c on $918.19M revenue and $1.41 and $3.87B in revenue.