Network Appliance Optimistic About Fiscal Year

Storage giant Network Appliance said it is on the path to continued fast growth and increased its forecast for its current fiscal year. NetApp's revenues will finish 25 percent to 28 percent higher than 2005, where sales were $1.6 billion, the company said Wednesday night.

NetApp, whose torrid growth has made it the subject of a just-released VARBusiness cover story, raised its forecast during its first fiscal quarter earnings report, in which revenues increased 25 percent totaling $448 million and profits increased 28 percent totaling $60 million.

The first quarter was in line with previously lowered estimates due to a longer evaluation period of its new FAS3000 system, which also impacted sales of older models, specifically the FAS 960 and NearStore R200, which the company predicts will continue to decline in the second quarter.

"Overall, the rest of our business continued to perform very well," said NetApp Ceo Dan Warmenhoven on Wednesday night's conference call. From a channel perspective, Warmenhoven said indirect sales were down this quarter by 6 percent sequentially, totaling 50 percent of revenues. Warmenhoven attributed the decline to weakness in Japan and its federal businesses, which primarily go through the channel.

Its distribution partners Arrow and Avnet accounted for 10 percent of revenue, Warmenoven added. Also, the company's OEM relationship with IBM is on track, the company said.

IBM several weeks ago launched the first product to come from that pact: TotalStorage N3700, which is a rebranded version of NetApp's FAS270. The network-attached solution supports up to 16 terabytes of capacity and offers iSCSI SAN connectivity as well.

The two companies in August broadened their pact to collaborate on virtualization, combining the functionality of NetApp's FAS line and V-Series with IBM's storage-virtualization technologies and blade servers.

"We expect to work closely with NetApp on virtualization," said Charlie Andrews, director of IBM's TotalStorage product line.