- "Demand from enterprises improved (especially in the U.S.), with a notable increase in [$1M+] million deals. We believe this data point, combined with results from CDW, SNX, IM, STX & WDC suggests a 2H spending cycle in US commercial," writes Needham's Richard Kugele, who has upgraded NetApp (NTAP +5.2%) to Buy following its FQ1 beat and in-line FQ2 guidance.
- Pac Crest's Brent Bracelin is pleased with NetApp's gross margin gains, which he thinks highlights the company's "software-intensive model and technology differentiation." He also notes attach rates for NetApp's clustered storage software "is now approaching 50% on mid-range products, more at the high end." NetApp mentioned on the CC (transcript) shipments of clustered nodes rose 177% Y/Y.
- Also mentioned: NetApp's anticipated FlashRay systems (built from the ground up to handle flash storage) will begin shipping next month, thus filling a hole in the company's lineup as it squares off against purpose-built flash hardware from EMC, IBM, and a slew of startups. Ahead of the launch, shipments of other all-flash products rose 48%.
- The company still has its skeptics following many quarters of soft growth. Credit Suisse's Kulbinder Garcha: "NetApp’s LT growth potential remains depressed reflective of changing enterprise focus, commodity infrastructures, and competitive pressure from EMC in mid-range and nimble startups."
- NetApp's branded revenue rose 1% Y/Y in FQ1 to $1.36B. OEM revenue, hurt by the winding down of the IBM deal, fell 23% to $129M.