NetApp Profit Falls 15%; It Buys Data Domain for $1.5 Billion

Data storage company

NetApp

(NTAP) - Get Report

said Wednesday that its fiscal fourth quarter profit fell 15% year-over-year, but announced plans to acquire rival

Data Domain

(DDUP)

for $1.5 billion in cash and stock.

The Sunnyvale, Calif.-based company reported fiscal fourth-quarter net income of $75.1 million, or 23 cents per share, a 16% decline from $89.8 million, or 26 cents per share, in the year-ago period. Excluding items, the company saw adjusted fourth-quarter profit of 31 cents per share, while revenue dropped 6% to $879.6 million.

On average, Wall Street analysts expected a profit of 23 cents per share on sales of $856.5 million.

For the full fiscal year 2009, the company earned $86.5 million, or 26 cents per share, down 72% from a profit of $309.7 million, or 86 cents per share, in the previous year. Revenue gained 3%, however, to $3.41 billion from $3.3 billion.

The bigger news to come out of NetApp's earnings call was that the company is planning to buy rival Data Domain in a $1.5 billion cash/stock deal.

NetApp agreed to pay $25 per share of DDUP, a nearly 40% premium on DDUP'sWednesday closing price of $17.91. The deal is expected to close within the next two to four months, and NetApp said it will operate Data Domain as a product line, rather than as a stand-alone company.

NetApp shares rose 68 cents, or 3.9%, in late-morning trading Thursday.

Shares of NTAP are off 52-week highs of $26 a share. The stock has technical support in the $13-$14 price area. If the shares can firm up, we see overhead resistance around the $19-$22 price levels. We like the market's reaction to the deal so far. We do not currently rate this non-dividend paying stock, but we do follow the company closely.

NetApp does not currently pay a dividend.

Ross Stores' Profit Jumps 15%; It Raises Guidance

Discount retail chain

Ross Stores

(ROST) - Get Report

said Thursday that its first-quarter profit rose substantially year over year, as cost-conscious consumers hunted for bargains amid the economic recession.

The Pleasanton, Calif.-based company reported first-quarter net income of $91.4 million, or 72 cents per share, compared with $79.5 million, or 60 cents per share, in the year-ago period. Overall revenue jumped 9% to $1.69 billion from $1.56 billion in the same period last year.

On average, Wall Street analysts expected a profit of 72 cents per share, on lower revenue of $1.66 billion.

Ross said that same-store sales rose 3% during the most recent quarter. Same-store sales are considered a key indicator of a retailer's health, since they measure the performance of stores open at least one year.

In response to the positive quarter, Ross raised its full-year 2009 guidance, saying it now expects a profit between $2.62 and $2.72 per share, compared with a lower previous forecast of $2.25 to $2.45. Analysts currently expect lower earnings of $2.54 per share.

As for the upcoming second quarter, the company said it sees earnings of 60 to 63 cents per share, with same-store sales to be flat or down 1%. Full-year same store sales could register a gain of up to 3%.

Ross Stores shares rose $2.26, or 6.3%, in late-morning trading Thursday.

We removed shares of ROST from our "Recommended" list back on Oct. 2, when shares were trading at $36.49. The company has a dividend yield of 1.23%, based on last night's closing stock price of $35.81. The stock has near-term technical support in the $31-32 price area. If the shares can continue today's pop higher, we see overhead resistance around the $40-$41 price levels. We like the company, but will remain on the sidelines for now.

Ross Stores is not recommended at this time, holding a Dividend.com DARS Rating of 3.3 out of 5 stars.

Advance Auto Parts' Profit Rises 14%

Advance Auto Parts

(AAP) - Get Report

said late Wednesday that its first-quarter profit rose 14% year over year, beating Wall Street expectations.

The Roanoke, Va.-based company reported first-quarter net income of $93.6 million, or 98 cents per share, up 14% from $82.1 million, or 86 cents per share, in the year-ago period.

Overall revenue grew 10% from last year to $1.68 billion, aided by the 114 new store openings in the last 12 months. Same-store sales, considered a key indicator of a retailer's health since they measure sales in stores open at least one year, rose 8.2% in the quarter.

On average, Wall Street analysts expected a profit of 92 cents per share on revenue of $1.59 billion.

AAP said that it closed four stores in the first quarter, and unveiled plans to close an additional 40 to 55 additional stores this year "that are delivering unacceptable strategic or financial results." The closings in the first quarter impacted earnings by 4 cents per share, while the additional closures are expected to result in a 15-to-22-cent per-share charge in fiscal 2009.

We had removed shares of AAP from our "Recommended" list on Apr. 17, when they were trading at $43.54. The company has a dividend yield of 0.56%, based on last night's closing stock price of $42.89. The stock has near-term technical support in the $36 price area. If shares can firm up, we see overhead resistance around the 52-week high levels of $45 a share. We like the company, but will remain on the sidelines for now.

Advance Auto Parts is not recommended at this time, holding a Dividend.com DARS Rating of 3.4 out of 5 stars.

PetSmart Profit Jumps 12%

Pet products retailer

PetSmart

(PETM)

said late Wednesday that its first-quarter profit rose 12% year over year, helped by higher merchandise and pet services sales.

The Phoenix, Ariz.-based company reported first-quarter net income of $46.3 million, or 37 cents per share, up 12% from $41.2 million, or 32 cents per share, in the year-ago period. Revenue rose 9%% to $1.33 billion.

On average, Wall Street analysts expected a profit of 30 cents per share on slightly higher revenue of $1.35 billion.

PetSmart intimated that its merchandise sales grew 9% in the quarter, while pet service sales grew 10%.

Same-store sales, which are considered a key indicator of a retailer's health since they measure the performance of stores open at least one year, rose by 3.9%.

PetSmart said it expects second-quarter profit to range between 26 cents and 30 cents per share, and raised its full-year 2009 profit forecast to a range of $1.42 to $1.52 per share. The company had previously forecast $1.40 to $1.50 per share.

On average, Wall Street analysts expect a second quarter profit of 29 cents per share, and a full-year 2009 profit of $1.47 per share.

PetSmart shares fell $1.85, or 8.3%, in morning trading Thursday.

We had removed shares of PETM from our "Recommended" list back on Sept. 17, when the stock traded at $26.60. The company has a dividend yield of .54%, based on last night's closing stock price of $22.30. The stock has technical support in the $16-17 price area. If the shares can rebound from today's drop, we see overhead resistance around the $24 price level. We would remain on the sidelines for now.

PetSmart is not recommended at this time, holding a Dividend.com DARS Rating of 3.3 out of 5 stars.

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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.

Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.