Updated from 4:38 p.m. ET

Network storage systems company

Network Appliance

(NTAP) - Get Report

reported fiscal fourth-quarter results that were in line with Wall Street's drastically reduced expectations.

The Sunnyvale, Calif., maker of storage server appliances said after the regular session closed Tuesday that income excluding certain items totaled $7.9 million, or 2 cents a share, in the period ended April 28. That figure matched the expectations of analysts polled by

Thomson Financial/First Call

, but is 71% lower than the $24.9 million, or 7 cents a share, the company earned in the same period last year. Actual earnings were $500,000, allowing the company to break even on a per-share basis, compared with last year's $24.5 million, or 7 cents a share.

Revenue, meanwhile, came in at $225.8 million, beating the $219 million analysts were expecting and up from last year's $200 million.

Up until mid-April, analysts had been expecting NetApp's sales to come in around $310 million and earnings to be close to 10 cents a share. But then NetApp warned that it expected fourth-quarter sales to plunge as much as 25% from the third quarter's $288 million. The company said then that it expected earnings to come in between 1 cent and 3 cents a share for the quarter.

Since that warning, NetApp's shares have risen more than 35%.

"While the fourth quarter was challenging, Network Appliance is strategically positioned for consistent, long-term future growth,'' CEO Dan Warmenhoven said in a statement accompanying the earnings release. "As economic conditions improve, we believe information storage will lead the rebound in IT spending."

For the full fiscal year, NetApp had sales of $1 billion, up from $579.3 million in fiscal 2000. The company earned 32 cents a share in fiscal 2001, compared with 22 cents a share in the prior year.

Gross profit margins declined nearly four percentage points in the fourth quarter to 56.1%. Warmenhoven said that decline was due more to the company's aggressive pricing of older storage systems from inventory than to competition from

EMC

(EMC)

and other storage venders.

Recent

comments by NetApp executives to the effect that they were seeing some firming in corporate IT budgets may have had investors hoping for correspondingly bullish guidance Tuesday night. But CFO Jeffrey Allen spoke cautiously about the coming quarters on the conference call following NetApp's earnings release. "We lack clear signs of an overall IT spending recovery," he said, and told analysts to expect first-quarter revenue to come in more or less flat with the fourth quarter. First-quarter earnings, meanwhile, should be between 1 cent and 2 cents a share, Allen said.

That guidance is pretty much in line with what Wall Street is looking for, with analysts currently expecting first-quarter sales of $230 million and earnings of 2 cents a share. Whether that's enough to keep NetApp's shares aloft remains to be seen. The stock is still trading with a hypergrowth valuation, more than 90 times its fiscal 2002 earnings estimates. Yet, analysts are currently forecasting revenue growth of about 17% for that same year, and a decline in earnings per share of about 25%.