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NetApp Launched Transformation Program to Streamline Business

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Revenues fell 10.6% YoY in fiscal 3Q16

On February 17, 2016, NetApp (NTAP) announced its fiscal 3Q16 results and reported revenues of $1.39 billion, a fall of 10.6% YoY (year-over-year) compared to revenues of $1.55 billion in fiscal 3Q15. GAAP (generally accepted accounting principles) net income for 3Q16 was $153 million, or $0.52 per share, compared to net income of $177 million, or $0.56 per share, in fiscal 3Q15.

Non-GAAP net income for fiscal 3Q16 was $206 million, or $0.70 per share, compared to non-GAAP net income of $238 million, or $0.75 per share, in fiscal 3Q15.

NetApp ended fiscal 3Q16 with $5 billion in cash, cash equivalents, and investments. The firm generated $355 million in cash from operations and returned $137 million to shareholders through repurchases and cash dividends.

“NetApp’s third quarter results demonstrate good progress in advancing our strategy and strong operational execution despite the challenging macroeconomic environment,” said George Kurian, CEO of NetApp.

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“To position NetApp for long-term success, we launched a transformation program designed to streamline the business and reduce our cost structure, while at the same time, maintaining our ability to invest in strategic opportunities. We are confident that we have the right strategy to further pivot the company toward the growth areas of the market and deliver long-term value.”

Guidance for fiscal 4Q16

In fiscal 4Q16, NetApp (NTAP) expects revenues in the range of $1.35 billion–$1.5 billion. GAAP EPS (earnings per share) is expected in the range of $0.12–$0.21 per share whereas non-GAAP EPS is expected in the range of $0.55–$0.60 per share.

NetApp has a market capitalization of $7.42 billion. Its peer companies in the storage space include Seagate Technologies (STX), EMC (EMC), and Hewlett-Packard (HPQ), with market capitalizations of $8.79 billion, $48.36 billion, and $18.14 billion, respectively. NetApp constitutes 3% of the First Trust ISE Cloud Computing Index ETF (SKYY).

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