NetApp ( NTAP) shares kept tumbling Tuesday on evidence that the company's sales are slowing as well as growing nervousness about wider data storage spending.

NetApp's stock closed down nearly 12% to $12.99, as one firm lowered its NetApp estimates and price target after NetApp CEO Dan Warmenhoven's quote in Business Week that he believes sales "won't be anywhere near our projected growth rate."

"Following negative comments in the press from NetApp's CEO, we are taking this opportunity to reset our expectations, though we remain buyers of the stock at this level," wrote Baird analyst Jayson Noland, in a note.

On Monday, the stock fell 8% in the wake of Warmenhoven's comments.

The storage vendor had previously issued guidance of 15% to 20% year-over-year revenue growth, although, like many tech firms, NetApp is coming up against tightening IT budgets.

Faced with an increasingly tough spending climate and stiff competition from rivals such as EMC ( EMC), Warmenhoven is also reportedly looking to cut NetApp's hiring plans from 550 to 150 people.

NetApp did not respond to a request for comment from TheStreet.com Tuesday, although Baird said he feels that the company could be sailing into choppy waters.

Noland lowered his NetApp 2009 revenue estimates from $3.92 billion to $3.75 billion and also lowered its EPS estimate from $1.38 to $1.25. NetApp's current revenue guidance is between $3.79 billion and $3.95 billion and its EPS estimate is between $1.40 and $1.46.

Until recently, storage was considered one of the more "recession-proof" parts of the technology sector, thanks to firms' spiraling volumes of data. Whereas businesses can comfortably delay software and PC upgrades until the economy improves, they still need to store emails, electronic files and all the other data that are part and parcel of modern business life.

Such is the extent of the current economic crisis, however, that firms, particularly in the financial sector, are now reappraising their storage spending.

"Our thesis relative to the storage systems market has steadily grown more cautious over the last year," wrote Citigroup analyst Paul Mansky, in a recent note. "From a vertical exposure, clearly financial services will be an ongoing area of concern through the next 6-12 months -- however, we believe a prudent approach for investors should include anticipation of a broadening of the weakness to include virtually every vertical segment."

Mansky also highlights the government, commercial, and consumer markets as being at risk. "Those likely to be hit by the second "tranche" of weakening (government, commercial and consumer) are F5 , Foundry ( FDRY) ( Brocade ( BRCD), assuming an acquisition close), NetApp and Western Digital ( WDC).

Citigroup estimates that the commercial and financial services markets make up, respectively, 40% and 15% of NetApp's revenue, although its sales to telcos could help it weather the current financial storm.

"Telco is likely somewhat more resistant," wrote Mansky, adding that telco sales represent an estimated 30% of NetApp's revenues.

NetApp wasn't the only storage vendor whose stock was trading down today. Shares of technology bellwether IBM ( IBM), for example, were down more than 5% in afternoon trading, and Sun's ( JAVA) shares dipped more than 8%.

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