NetApp to cut 500 jobs worldwide after disappointing quarter

NetApp has a facility on North Rock Road. (Feb. 17, 2015)
NetApp has a facility on North Rock Road. (Feb. 17, 2015) The Wichita Eagle

NetApp, which has a large research and development center at 3718 N. Rock Road, had a rough quarter and is looking to cut 500 jobs worldwide.

NetApp, based in Sunnyvale, Calif., makes data storage systems and software for companies.

Revenue for the quarter was $1.54 billion, down from $1.65 billion in the same quarter of 2014. Profits were $135 million, down from $197 million in the same quarter of 2015.

The company released its fourth-quarter financial report after the markets closed Wednesday.

For the year, revenue was $6.12 billion, down from $6.33 billion in the previous year. Profit for the year was $560 million, down from $638 million a year earlier.

Company CEO Tom Georgens said in a conference call with analysts Wednesday afternoon that the company ran into a surprising bump during the quarter with the transition to its latest technology.

Over the past year, the company has started to get its customers to shift from its core Data Ontap data storage technology to a cloud-based version called Clustered Data Ontap. Many of the company’s big customers balked at spending the money to make the switch, unconvinced the product was superior.

Gerogens said he is happy with the technology – it’s just a matter of getting it in front of more customers. To that point, the company will add to its sales force as well as bolster its efforts to educate customers and potential customers about the advantages of the new technology.

But to help pay for those new initiatives, the company will cut costs, including making job cuts. The 500 jobs worldwide represent 4 percent of the company workforce, said chief financial officer Nick Noviello.

When asked if further job cuts are contemplated, Noviello said the company is confident more customers will buy Clustered Data Ontap once they see it. But, he added, they will do what is necessary if they are wrong.

Reach Dan Voorhis at 316-268-6577 or Follow him on Twitter: @danvoorhis.