NEW YORK (TheStreet) -- Shares of NetApp (NTAP) sharply declined 12.26% to $31 in afternoon trading after the Sunnyvale, CA-based provider of storage and data management software, systems and services reported fourth quarter 2015 earnings after the close yesterday, leading several analyst firms to downgrade their valuations of the company.
NetApp's net revenue for the fourth quarter was $1.54 billion. The company earned non-GAAP net income of $202 million, or $0.65 per share, compared to non-GAAP net income of $284 million, or $0.84 per share, for the comparable period of the prior year. The net revenue reported was below Cantor Fitzgerald's projection of $1.58 billion for the quarter.
For fiscal year 2015, NetApp reported $6,123 billion in net revenue, posting non-GAAP net income of $865 million, or $2.70 per share for the year. These numbers fell short of Cantor Fitzgerald's yearly net revenue projection of $6,163.2 billion and yearly non-GAAP projected earnings of $2.77 per share, leading them to downgrade the company to "hold" from "buy," and a decreased price target to $35 from $43.
Needham & Co. and Summit Research followed suit, each downgrading the stock to "hold" from "buy," following a statement from NetApp citing that worldwide headcount we be reduced by approximately 500 employees. The company expects to incur aggregate charges of approximately $25 million - $35 million for employee terminations and other costs associated with the realignment, according to the statement.
"Not only is the storage market undergoing secular challenges but NetApp is experiencing its own execution issues with the transition of customers to Clustered ONTAP," said Cantor analyst Brian White."We believe the combination of secular challenges and execution/transition issues leaves NetApp vulnerable to customer retention issues and market share losses in a very competitive storage market."