The data storage company NetApp on Wednesday reported a lower than expected revenue. A decline of demand for its product has made the company decided to cut 12% of its employees.
Reuters reported that the company's net income fell to $153 million in the third quarter ended January 29 from $177 million a year before. The current net income yield 4 cents lower than a year earlier to a 52 cents per share, below analyst expectation for its third quarter earnings of 68 cents a share. Its revenue also dropped 19.3% to $750 million with total revenue fell 10.6% to $1.39 billion, weaker than $1.45 billion expectation.
In the company's earning release CEO George Kurian wrote as quoted by ZDNet, "To position NetApp for long-term success, we launched a transformation program designed to streamline the business and reduce our cost structure, while at the same time, maintaining our ability to invest in strategic opportunities. We are confident that we have the right strategy to further pivot the company toward the growth areas of the market and deliver long-term value."
One of its transformation program is to layoff 12% of its employees, which according Venture Beat, the company had around 12,000 employees. Cutting off 12% of those number means nearly 1,500 employees will have to lose their jobs in NetApp. The layoff will be finished in July 2016 and will add $60-70 million of extra expenses.
NetApp was founded in 1992 by David Hitz, James Lau and Michael Malcolm to build storage and data management solutions for its customers. The company aimed to help its customers accelerating their business breakthroughs and achieve outstanding cost efficiency. In 1995, NetApp had it initial public offering and continued to deliver its top-notch product.
The company is known for its distinctive product line, the NetApp Fabric-Attached Storage, or most well-known as NetApp's network attached storage (NAS). This product is famous as an enterprise-level storage area network.
NetApp storage system is capable to handle data storage over network using multiple protocols such as NFS, CIFS, FTP, TFTP, and HTTP. It can also utilize block-based protocols such as fibre channel, fibre channel over ethernet and iSCSI.
The Sunnyvale-based company is listed as top 5 of data storage and data management companies, along with EMC Corporation, Seagate and Lenovo. Last year, NetApp acquire SolidFire, company that build storage system designed specifically for cloud computing system. Acquisition of SolidFire was finalized with $870 million in cash.
As the company reported a lower than expected revenue in the third quarter ended on January 29, it planned to streamline its operation by cutting off 12% of its employees. There will be 1,500 employees to be laid off, which projected to be finalized in July this year.
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