Stock drops for NetApp, owner of LSI's Engenio

Investors didn't like NetApp's quarterly results unveiled on Wednesday: revenue up 26 percent, below estimates at $1.46 billion, and profit down 7.4 percent to $139.5 million.

NetApp stock tumbled 3 percent after the report came out and continued to fall in after-hours trading.

NetApp completed the $480 million acquisition of LSI's Engenio computer storage division in the quarter. Engenio has a large research and development facility at 37th North and Rock Road.

On a conference call with analysts, NetApp executives pointed to a dramatic pull back in spending by the federal government and by large banks in July as hurting what had been a stellar May and June.

Tom Georgens, president and CEO, pointed to the debate over the debt ceiling and the general uncertainty by federal agencies as reasons for the pullback.

But Georgens said that, for now, at least, he remains optimistic about the company's future, saying that the company is gaining market share and has strong margins.

"We are certainly not in panic mode," Georgens said. "We have seen some sector weaknesses, but we are going to ride through them."

Georgens said NetApp is still trying to get a feel for Engenio, but that he was pleased with the division's performance.

He expects the company to see some gains through cost cutting at Engenio in quarters to come. That would mean, in the near term, simply gains stemming from efficiency from sharing supply lines.

In the future, Georgens said the company would look to squeeze savings out of shared manufacturing and, later, from shared engineering of common components.