NetApp doubles quarterly profit

But revenue figures fail to impress

NetApp posted encouraging profit figures for Q1 2011

US-based storage and data management specialist NetApp says its latest quarterly results were boosted by an expanded strategic relationship with Microsoft and other suppliers to help customers and service providers make the transition to cloud computing.

But while the company boasted a more than doubling of its quarterly profit for the three months to 30 July 2010, disappointing revenue figures, which beat Wall Street estimates by the smallest margin in four quarters, saw its shares fall five per cent.

NetApp posted a net income of $142m (£91m) for the first quarter of fiscal year 2011, compared to a net income of $52m for the same period in the previous year on revenue up 36 per cent to $1.14bn.

The company said it saw some areas of weakness in Europe, the Middle East and Africa – which last year accounted for a third of NetApp's revenue – and it remained cautious about the next quarter.

"While southern Europe is a small market for the company, the UK is a meaningful market for us and a slowdown there clearly has some impact on us," the company said on a conference call with analysts.

Nonetheless, the company remained bullish about future prospects: “With total revenue growth for the quarter of 36 per cent and product revenue growth of 51 per cent year on year, NetApp has begun our fiscal year with great momentum,” said Tom Georgens, president and CEO.

“The NetApp value proposition allows customers to implement more flexible and efficient storage infrastructures at a lower cost. Our results indicate we are achieving clear customer preference as IT organisations transform their datacentres.”

NetApp estimates revenue for the second quarter of fiscal year 2011 to be in the range of $1.16bn to $1.21bn.