Network Appliance Beats Views

Network Appliance (NTAP) posted better-than-expected second-quarter results and set a buyback plan for up to $650 million of its shares, sending the company's stock higher after hours Wednesday.

For the second quarter ended Oct. 28, the storage-networking gearmaker posted net income under generally accepted accounting principles of $70.7 million, or 18 cents a share, up from $55.3 million, or 15 cents a share, a year earlier.

Excluding items such as stock options and amortization, Network Appliance's non-GAAP income rose to $79.1 million, or 21 cents a share, from $58.4 million, or 16 cents a share, last year. Earnings on this basis beat Thomson First Call's mean analyst estimate of 18 cents, as well as the company's own August guidance of 18 cents to 19 cents.

Revenue rose 29% to $483.1 million from $375.2 million, topping analysts' projection of $476 million.

"We achieved significant growth in revenue and profitability during the quarter, driven by the compelling value proposition of our new FAS3000 midrange product line," said Dan Warmenhoven, Network Appliance's chief executive, in a statement.

The company issued third-quarter guidance in line with analysts' estimates, while slightly bolstering its full-year view. Network Appliance predicted third-quarter GAAP earnings of 17 cents to 18 cents a share, and non-GAAP earnings of 20 cents to 21 cents a share. Analysts, on average, predict non-GAAP earnings of 20 cents a share.

The company also expects third-quarter sales to rise 25% to 28% from a year earlier. Based on last year's third-quarter sales of $412.7 million, the projection implies a top line of $515.9 million to $528.3 million -- bracketing analysts' current estimate of $519 million.

For the full year, Network Appliance expects 26% to 28% revenue growth, compared with its previous guidance of 25% to 28%. The company sees fiscal 2006 GAAP earnings of 70 cents to 73 cents a share, with non-GAAP earnings of 77 cents to 80 cents. The company's previous projection was for non-GAAP earnings of 76 cents to 79 cents, while analysts' forecast called for earnings of 76 cents.

Separately, Network Appliance said its new $650 million buyback includes about $76 million remaining under previous authorizations. The company has about 371.1 million shares outstanding.

Network Appliance shares recently rose 4.6% in after-hours trading to $29.53, up $1.29.

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