NEW YORK (TheStreet) -- Shares of NetApp (NTAP) are plunging 11.69% to $31.20 in Thursday's pre-market trading after JPMorgan downgraded the California-based computer storage and data management company to "underweight" from "neutral."
JPMorgan analysts said the downgrade was due to fourth quarter revenues that were 10.9% below their estimates. They added that according to the company, this was due to a tough product transition for customers.
NetApp reported weak fourth quarter results yesterday. It reported revenue of $1.54 billion, or 65 cents per share, compared to revenue of $1.65 billion,or 84 cents per share in the same quarter last year. On a year-over-year basis, the quarterly revenue fell 6.6%.
The company also missed Thomson Reuters consensus estimate of 72 cents per share for the fourth quarter.
"We are not pleased with our results in the fourth quarter," CEO Tom Georgens said.
Referring to the new product transition, he added, "After a thorough analysis of these challenges, it is clear that we underestimated the disruption that the transition to clustered ONTAP has had an our direct and indirect pipeline. The disruption has been most acutely felt in our Americas commercial geography, due to the heavy concentration of large enterprise customers in the U.S."
TheStreet Ratings team rates NETAPP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETAPP INC (NTAP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."