Earnings Preview: NetApp

| About: NetApp, Inc. (NTAP)
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NetApp (NASDAQ:NTAP) is expected to report Q3 earnings after the market close on Wednesday, February 15, with a conference call scheduled for 5:00 pm ET.


The consensus estimate is 58c for EPS and $1.56B for revenue, according to First Call. Guidance for Q3 provided on its last earnings call is for EPS of 56c-60c on $1.52B-$1.60B in revenue. The Q3 adjusted gross margin was forecast at approximately 60%, with the non-GAAP operating margins finishing around 17%. The company saw the biggest impact from Thailand flooding coming in 2H12. Management's forecast is exactly in-line with Street targets. However, that forecast was made a long time ago, and it's conservative because of the flooding problems in Thailand and economic turmoil in Europe.

Analyst Views

Wedbush maintains a Neutral rating on shares of NetApp as long-term secular growth is tempered by near-term headwinds and increasing competition. The firm remains confident that the company will continue to benefit from growth trends in the wider storage market. Further, recent positive results and commentary from rival EMC (EMC) indicate that storage demand remains high and IT spending on storage products should increase in 2012, which bodes well for NetApp. However, Wedbush thinks these positive trends are taking a backseat to concerns about the potential impact from HDD shortages, Engenio, and competition and Europe. Consensus for Q4 is 63c on $1.68B in revenue. FY13 consensus is $2.74 on $6.93B in revenue.