NetApp (NTAP), provides various storage solutions and has been constantly acquiring a sizeable chunk in the global storage market share. The growth of the company is illustrated by the fact that it now charts in top 5 storage solution providers in the world. This goes on to prove that NetApp is one of the leaders in this business segments. Refer the table below for statistics.
Top 5 Vendors, global external disk storage, Financial for 4Q-2013($in Millions)
| Vendor | Revenue 4Q-2013 | Market Share (4Q -2013) | Revenue 4Q-2012 | Market Share (4Q -2013) | YoY Growth |
| EMC | $2,276 | 32.9% | $2,071 | 30.7% | 9.9% |
| IBM | $901 | 13.0% | $1,009 | 14.9% | -10.6% |
| NetApp | $791 | 11.5% | $780 | 11.6% | 1.5% |
| HP | $667 | 9.6% | $626 | 9.3% | 6.5% |
| Hitachi | $558 | 8.1% | $590 | 8.8% | -5.6% |
| Others | $1,716 | 24.8% | $1,670 | 24.8% | 2.7% |
| Cumulative | $6,909 | 100.0% | $6,746 | 100.0% | 2.4% |
Top 5 Vendors, global total disk storage, Financials for 4Q-2013($in Millions)
| Vendor | Revenue 4Q-2013 | Market Share (4Q -2013) | Revenue 4Q-2012 | Market Share (4Q -2013) | YoY Growth |
| EMC | $2,276 | 25.8% | $2,071 | 23.8% | 9.9% |
| HP | $1,441 | 16.3% | $1,382 | 15.9% | 4.3% |
| IBM | $1,240 | 14.0% | $1,397 | 16.0% | -11.2% |
| DELL | $875 | 9.9% | $983 | 11.3% | -11.0% |
| NetApp | $791 | 9.0% | $780 | 9.0% | 1.5% |
| Others | $2,202 | 25.0% | $2,095 | 24.0% | 5.1% |
| Cumulative | $8,825 | 100.0% | $8,708 | 100.0% | 1.3% |
Source: IDC Worldwide Quarterly Disk Storage Systems Tracker, March 6, 2014
Bottom Line Growing
The company recently reported its first quarter earnings for fiscal 2015. Total revenue was down by 1.8% year over year to $1.49 billion. Revenue did decline but it did beat the consensus estimate of $1.47 billion. Drop in revenue was mainly due to 22.7% decline in OEM revenue but branded revenue was up by 0.8%. Falling price of flash drive in the global market is also another factor for consolidated decline in the revenue.
Segment wise, Product revenue comprises 59% of total revenue which recorded $882 million, 5.2% down from year ago quarter. Software revenue contributes to 15% of the total revenue and was down 3.2% year over year to record $221.3 million. But 26% of revenue is from the Services, which was the only segment which recorded a growth by 7.9% year over year to record $385.3 million.
Revenue might have witnessed a decline as compared to same quarter last year, but income did rise for the company. The growth in income, despite the decline in the revenue goes on to prove that company is implementing various overhead cost cutting measures and higher gross margin products which had a positive influence on the bottom line for the company. Net income was up 8.3% year over year, to record $88.4 million as compared to $81.6 million for same quarter last year. Diluted EPS increased by 17%, to record $0.27 as against $0.23% in same period last year. Non-GAAP income was up by around 3% year of year, to record $197.5 million as against $191.9 million in same period last year. Non-GAAP earnings were $0.60 per share on revenue of $1.49 billion.
Journey Ahead
In the current quarter, NABARD signed up a contract with NetApp for providing various storage solutions and disaster recovery solutions. NABARD is one of the leading banks in India, for giving and managing credit facilities to different offices for the advancement and improvement of agribusiness, little scale businesses, handicraft and various growth initiatives schemes for rural India. This bank also covers various government sponsored programs for business development in rural areas of the country. This is good news for NetApp as it further firms its grip for data storage solution in Asian countries and India is a huge market for this business.
NetApp is focused on the high margin product portfolio like flash array and converged storage solution. These products have already been witnessing sustained growth for NetApp. In 2012, Non-GAAP gross margin for storage products was 51.8% which increased to 54.8% in 2013. Furthermore the growth improved to 58% in the previous quarter as a result of high margin products portfolio. The company anticipates that growth momentum will further continue in the future.
For the second quarter of 2015, the company expects net revenues to be in the range of $1.49-$1.59 billion. The non-GAAP earning are likely to be in the range of $0.66-$0.71 per share this is much more than the consensus estimate of $0.52 per share. Anticipated non-GAAP gross margin is expected to be in the range of 64% to 64.5%, and non-GAAP operating margin to be in range of 17.5% to 18%.
Competitor
EMC Corporation(EMC) is a worldwide pioneer in empowering organizations and service providers to change their operations and convey IT as a service. Essential to this change is distributed cloud computing. Through its innovative product portfolio, EMC quickens the excursion to cloud computing environment, helping various IT divisions of organizations to store, maintain, secure and analyze their most significant stake — data — in a more deft, trusted and expense productive. The company is increasing its grip on storage market and its global market share increased to 25.8% as against 23.8% year ago (refer the chart above for global total disk storage market). Furthermore, In the second quarter earning the company recorded revenue growth of 5% year over year, to record %5.9 billion
The company has been upgrading its products to be ahead in the market of storage solutions. It recently upgraded its product Isilin One FS the upgraded product provides a better performance for storing and managing voluminous unstructured data. It now is more simple in implemantion for migratind petabytes of data.
The two new platforms for Isilon is "Isilon S210" and "Isilon X410" has enhanced operation capabilities. The Isilon X410 offers 70% build in throughput at 33% less $/MBPS, and its flexibility effortlessl
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