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Updated from 4:45 p.m. EST

In its fiscal second quarter of 2003,


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easily bested lastyear's loss, posting results in the black, and said itexpects mild growth for the January quarter nowunderway. Sales for the most recent quarter came inslightly above expectations, while earnings matchedthe Wall Street consensus.

The company, which makes network-attached storageunits, posted net income of $15.8 million, accordingto generally accepted accounting principles, andearnings of 5 cents per share. That's a significantimprovement from last year's net loss of $11.2 millionin the same period.

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Sales totaled $215.2 million, up 4% from lastquarter and nearly 11% from a year ago. Wall Streetestimates were for revenues of $212.25 million,according to Thomson Financial/First Call.

Gross margins of 62.4% were flat with the priorquarter. The company said its book-to-bill ratio was"well above" 1:1.

In the quarter underway, Network Appliance expectscontinued modest growth, with revenues expected toincrease 2% to 5% for total sales in the range of $219million to $225 million. Earnings are predicted to bein the range of 5 cents to 6 cents per share,depending on sales.

Both projections are in line with Street estimatesfor sales of $222.6 million and a per-share profit of6 cents.

Customers "don't seem to be anxious to spend theirmoney," said CEO Dan Warmenhoven on the conferencecall. In a positive sign for the company, though,management said earlier sales campaigns are bearingfruit, with the mix of customers now trending towardsbigger account sizes.

Network Appliance said it had hired about 40people in the quarter for both sales and R&D jobs,leaving it with an end-of-quarter head count of about2,390.

In after-hours trading, the stock gained 51 centsto $10.28. Earlier it closed up 54 cents, or 5.9%, to$9.77.