NetApp profit rises on higher enterprise spending

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NetApp Inc reported better--expected first-quarter as spent more to replace their ageing storage equipment.

company’s shares rose as much as 3 percent after bell.

Increased sales products sold under NetApp brand assuaged some investors’ concerns that company was losing business to newer and cheaper flash-based storage technology vendors such as Nimble Storage Inc and Pure Storage.

“What’s different (this quarter) overall is we got some rebound enterprise spending our larger .S.-based accounts,” Chief Tom Georgens told Reuters. “We saw a much larger number $1 million-plus transactions this quarter we saw Q1 a year ago.”

NetApp and larger rival EMC Corp are trying to growth by focusing on products such as flash-based storage and software-based technologies as cut spending on -end storage products for cheaper alternatives.

EMC last month reported better--expected revenue helped by higher sales newer flash storage products. [eap_ad_2] Analysts expect NetApp to benefit from of its flash-based storage , FlashRay, late 2014.

NetApp has overhauled its Data Ontap operating , which protects and manages data at both its customers’ data centers and cloud vendors such as Inc, to drive product sales.

Revenue from NetApp’s branded product business, which accounts for 91 percent of sales, rose 0.7 percent the quarter ended July 25.

“Branded revenue is going to continue improving on a year-over-year trajectory and I think a lot of investors were doubtful to whether or not that would happen,” Technology Insights Research analyst Nehal Chokshi told Reuters.

NetApp said it expects current-quarter adjusted of 66-71 cents per share on revenue of $1.49-$1.59 billion.

Analysts were expecting second-quarter adjusted of 69 cents per share on revenue of $1.53 billion.

In the first quarter, adjusted profit rose 13 percent to 60 cents per share, beating analysts’ average estimate of 57 cents per share.

Revenue fell about 2 percent to $1.49 billion, but topped the average Wall Street estimate of $1.47 billion.

Adjusted gross margin rose to 64.3 percent from 61.3 percent a year earlier.

“Their service gross margin came in quite a bit better than they had guided for,” Piper Jaffray analyst Andrew Nowinski told Reuters, adding that he viewed NetApp’s outlook as lightly conservative.

NetApp also said it would pay a dividend of $0.165 per share on Oct. 22. (Reuters)[eap_ad_3]