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More on NetApp/IBM

  • IBM will stop selling NetApp (NTAP) storage hardware offered under the N Series label on May 27, per an internal memo picked up by Bloomberg.
  • As it is, NetApp's OEM revenue (heavily dependent on IBM) fell 34% Y/Y in the April quarter to $109.8M (7% of total revenue).
  • IBM's efforts to emphasize its own hardware played a role, as did Big Blue's competitive struggles - the company's total storage system sales fell 23% Y/Y in Q1, and IDC thinks its industry share fell 200 bps Y/Y in Q4 to 14%.
  • On the FQ4 CC (transcript), CFO Nicholas Noviello forecast NetApp will see its OEM business decline "up to 40%" in FY15 (ends April '15). The company's branded revenue (93% of total in FQ4) is expected to grow at a mid-single digit rate.
  • CEO Tom Georgens noted OEM sales include not just the N Series, but also sales of E-Series systems (high-performance SAN), which (OEM or otherwise) have been growing as a % of NetApp's revenue. He also insisted NetApp is "firmly positioned" with OEMs not named IBM.
  • Previous: IBM to stop selling NetApp gear
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