Shares of NetApp Inc. (NTAP) on Wednesday jumped almost nine percent in after hours trade after the data storage solutions provider's earnings were in line with analysts' expectations, while providing an upbeat forecast for the fourth quarter.
NetApp's third-quarter earnings, however, declined from a year ago as margins continued to be under pressure, offsetting higher revenues. The company incurred higher operating expenses mostly on increased sales and research costs.
NetApp also won a record number of new customers during the quarter, positively impacting shipments of high-end systems and enabling growth in revenue across all regions. The company during the quarter unveiled its "Smart Decisions" initiative, offering technologies to aid midsize businesses.
CEO Tom Georgens said more customers were leveraging storage virtualization, thereby placing NetApp on a sturdy platform pertaining to private and public cloud deployments.
The storage virtualization and cloud-based solutions provider's net income for the quarter was $120 million or $0.32 per share, compared to $186 million or $0.46 per share last year.
Excluding items, earnings was $216 million or $0.58 per share, compared to $226 million or $0.56 per share a year ago.
On average, 32 analysts polled by Thomson Reuters expected earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.
The Sunnyvale, California-based company posted revenue of $1.566 billion for the quarter, up from $1.290 billion last year.
Thirty-two analysts had a consensus revenue estimate of $1.56 billion for the quarter.
Operating expenses for the quarter increased to $752 million from $625 million in the corresponding quarter last year, mainly on increased sales and research costs.
NetApp expects fourth-quarter earnings in the range of $0.38 to $0.43 per share, with adjusted earnings anticipated in the range of $0.60 to $0.65 per share. Revenue for the quarter is forecast in the range of $1.645 billion to $1.725 billion, or a year-over-year growth of 15 to 21 percent.
Analysts currently expect earnings of $0.63 per share for the fourth quarter, with revenues of $1.68 billion.
NTAP closed Wednesday at $39.88, up $0.76 or 1.94%, on a volume of 11 million shares. In after hours, the stock gained $3.72 or 9.33%.
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