NetApp to Lay Off 500 Workers in Restructuring

By Maria Armental 

NetApp Inc. is laying off about 500 workers as part of a restructuring following disappointing results for the April quarter and weak projections for the current quarter.

The Silicon Valley company said it plans to eliminate the positions by the third quarter and expects to record a charge of $25 million to $35 million related to the cuts. Most of those charges are expected to be recognized in the first quarter, the company said in a securities filing.

Shares, up 4% over the past 12 months, fell nearly 9% to $32.25 in late trading, below a 52-week-low set Tuesday during regular trading.

For the first quarter, NetApp projects profit of 20 cents to 25 cents a share on $1.28 billion to $1.38 billion in revenue, compared with the consensus of 59 cents on $1.46 billion in revenue, according to Thomson Reuters. The lower projections account for the impact of the restructuring.

The Sunnyvale, Calif., company, meanwhile, said it was boosting its quarterly dividend by 9% to 18 cents a share.

Overall, for the quarter ended April 24, NetApp reported a profit of $134.9 million, or 43 cents a share, compared with $197 million, or 59 cents a share, a year earlier. The latest quarter had fewer shares outstanding.

Excluding stock-based compensation and other items, earnings fell to 65 cents a share from 84 cents a share a year earlier.

Net revenue fell nearly 7% to $1.54 billion.

NetApp had projected earnings of 70 cents and 75 cents on revenue of $1.55 billion to $1.65 billion.

Gross margin narrowed to 60.7% from 63.2% a year earlier.

The Silicon Valley company didn't specify in the news release what actions it was taking.

Shares, up 4% over the past 12 months, fell nearly 8% to $32.65 in late trading, below a 52-week-low set Tuesday during regular trading.

The Sunnyvale, Calif., company, meanwhile, said it was boosting its quarterly dividend by 9% to 18 cents a share.

For the first quarter, NetApp projects profit of 20 cents to 25 cents a share on $1.28 billion to $1.38 billion in revenue, compared with the consensus of 59 cents on $1.46 billion in revenue, according to Thomson Reuters.

Overall, for the quarter ended April 24, NetApp reported a profit of $134.9 million, or 43 cents a share, compared with $197 million, or 59 cents a share, a year earlier. The latest quarter had fewer shares outstanding.

Excluding stock-based compensation and other items, earnings fell to 65 cents a share from 84 cents a share a year earlier.

Net revenue fell nearly 7% to $1.54 billion.

NetApp had projected earnings of 70 cents and 75 cents on revenue of $1.55 billion to $1.65 billion.

Gross margin narrowed to 60.7% from 63.2% a year earlier.

Access Investor Kit for NetApp, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US64110D1046

Subscribe to WSJ: http://online.wsj.com?mod=djnwires