QUOTE AND NEWS
Benzinga  Aug 29  Comment 
In a note Thursday, Longbow Research published its mid-third quarter survey of IT storage resellers, which reflected additional signs of optimism. In particular, the firm focused on EMC (NYSE: EMC) and Network Appliance (NASDAQ: NTAP). Key...
Cloud Computing  Aug 26  Comment 
NetApp (NASDAQ: NTAP) today announced it is extending its more than a decade-long alliance with VMware to help customers transition to an IT future that is increasingly software defined and embraces cloud computing. As a leader in software-defined...
Cloud Computing  Aug 25  Comment 
Software defined storage provides customers with a vision and roadmap to the next generation data center including cloud deployments. NetApp® (NASDAQ: NTAP) today announced new solutions that increase and simplify automation of software-defined...
Forbes  Aug 20  Comment 
The company believes that the growing adoption of hybrid cloud computing should help FlexPod as Cisco’s Application Centric Infrastructure integrated with NetApp’s Clustered ONTAP and Flash storage solution is likely to gain further momentum....
SeekingAlpha  Aug 19  Comment 
By Trefis: Leading storage provider NetApp (NASDAQ:NTAP) and networking giant Cisco (NASDAQ:CSCO) signed an agreement back in 2010 to build FlexPod, an integrated infrastructure to take on rival storage company EMC (NYSE:EMC). Integrated...
Forbes  Aug 18  Comment 
In this environment it is best to focus on brand name companies that decline on weakness and test a value level. Here are five stocks to consider.
Forbes  Aug 15  Comment 
In early trading on Friday, shares of Monster Beverage (MNST) topped the list of the day's best performing components of the Nasdaq 100 index, trading up 28.7%.  Year to date, Monster Beverage registers a 36.0% gain.
Benzinga  Aug 14  Comment 
Midway through trading Thursday, the Dow traded up 0.29  percent to 16,700.16 while the NASDAQ surged 0.30 percent to 4,447.73. The S&P also rose, gaining 0.34 percent to 1,953.32. Leading and Lagging Sectors In trading on Thursday,...
Benzinga  Aug 14  Comment 
In a report published Thursday, Morgan Stanley analyst Katy L. Huberty reiterated an Underweight rating and $34.00 price target on NetApp (NASDAQ: NTAP). In the report, Morgan Stanley noted, “We see risk to the branded growth acceleration...
Benzinga  Aug 14  Comment 
Rice Energy (NYSE: RICE) shares moved up 2.33% to $28.11. The volume of Rice Energy shares traded was 878% higher than normal. Rice Energy priced 11.9 million share offering at $27.30 per share. RE/MAX Holdings (NYSE: RMAX) surged 6.01% to...




 
TOP CONTRIBUTORS

Network Appliance, Inc. (NASDAQ: NTAP) sells hardware and computer software and services used to store and manage large amounts of data. Its customers range from small and medium businesses to Fortune 10 companies. Network Appliance's flagship product is a piece of hardware that can store hundreds of terabytes of data (1 terabyte = 1000 gigabytes). The company's hardware is technologically more advanced than traditional storage devices (such as local hard drives) because it automatically optimizes storage space with its internal operating system and uses networks to connect to a company's computers that are far away. Corporations and government agencies are demanding large data storage capacities because of an explosion of electronic information from scientific and population growth. In addition to high storage capacities, these institutions also demand products that keep their data safe, especially in a world where more and more confidential information is transferred through computer networks. NetApp sells software packages, such as data reduction services and disk-to-disk backup software, along with its core hardware product, to address this demand.

Furthermore, to help NTAP meet all of its customers' needs, it has partnerships with many industry leaders such as Cisco Systems (CSCO), International Business Machines (IBM), Microsoft (MSFT), Symantec (SYMC), among others.[1]

Business and Financials

For fiscal year 2010 (NTAP's fiscal year ended April 30, 2010), NTAP posted total sales of $3.93 billion, a substantial increase from the previous year's sales of $3.41 billion.[2] Furthermore, it was largely able to keep its total costs the same as 2009, enabling NTAP to increase its operating income from $47.2 million in 2009 to $488.4 million in 2010. As a result, its net income increased to $400.4 million in 2010, compared to $64.6 million in 2009.[2]

Business Segments

NetApp's product line can be divided into hardware and software, sold to both small and large enterprises (SMEs) and large corporations. The company's intercore business is its network-based data storage hardware.

Products Segment (Hardware) (60.6% of 2009 net revenues)[3]

  • FAS family: NetApp's flagship Fabric-Attached Storage device is a piece of hardware, used to store a company's data, that has its own operating system, disk arrays and built-in data management software. The device is used to keep all of a company's data together in one location, while making sure the data is accessible and stored efficiently. This lets a company avoid spending money on buying expensive memory disks and wasting time tracking down scattered pieces of information.
  • V-Series: A V-Series device is a piece of hardware that centralizes the data located on storage devices purchased from other data management vendors. This also makes sure the company's data is accessible and stored efficiently, and is especially valuable when the company's data is dispersed on storage devices purchased from many different companies.

Software Software entitlements and maintenance (17.3% net revenues)[3]

  • Data protection: NetApp sells software that protects confidential data from being lost, destroyed, or stolen. It does so through encryption, disk-to-disk back up, and data reduction. The security of a company's data has become critical because all kinds of confidential information is stored electronically.
  • Storage management: NetApp also sells software designed to make enterprise data management less complex, for example, by letting a company migrate large amounts of data to a centralized server and accounting for duplications. As a result, the company saves money by hiring less IT personnel and avoiding costly situations in which data is lost or mishandled.

Consulting/Services (22.1% net revenues)[3]

In addition to its products, NetApp also provides consulting services, such as helping a company use its IT software to maximize storage space, as well as technical support.

Key Trends and Forces

As companies and government agencies produce more and more data, they demand high-capacity data storage hardware

The growth of information that is transferred electronically creates high demand for hardware and software like those sold by NetApp: by some estimates, the growth rate of data needed to be stored has reached 100% a year. Sources of this growth include scientific advancements (such as genomic data in the field of bioengineering), higher standards for products/services (such as new categories of financial data kept by banks), and population growth (such as social security data). NetApp's products store hundreds of terrabytes of data efficiently using its built-in data mangement software. At optimum levels, a NetApp NAS system reduces the required raw data storage space by 80% in comparison to standard storage devices. Furthermore, since NetApp systems centralize all of a company's data, they make information more accessible in comparison to traditional hardware. For example, an employee in New York would be able to access changes to a document made by an employee in Hong Kong. Effective data management lets a company spend less time/money on IT and increases the productivity of the company's employees.

Increased physical risks to devices storing confidential data lead to greater demand for data protection hardware

More and more pieces of sensitive information, ranging from social security numbers to credit card numbers, are being stored electronically. In light of this trend, geopolitical events such as terrorist attacks, natural disasters such as hurricane season (both of which threaten to damage servers where data is physically stored), and laptop theft pose a challenge to the security of sensitive data. NetApp sells hardware devices and software packages that help companies minimize the cost of recovering from such calamaties. Therefore, as the value of a company's data increases, so does the company's demand for data protection products.

IT software vendors such as NetApp are especially vulnerable to the market volatility that affects their group of customers

While high-end data storage products improve the handling of a company's data, they are not an essential component of the company's business. Many companies see no need to purchase expensive, high-end data storage devices or spend money upgrading their preexisting data management systems. This is especially manifest during times of recession, since IT is an easy place for companies to save money. NetApp is also vulnerable to slow-downs in consumer spending in the media/entertainment and telecommunications industries.

Competitors

NetApp competes in the high-performance networked storage market. It competes against several large corporations, such as Hewlett-Packard Company (HPQ), International Business Machines (IBM), and Sun Microsystems (JAVA), that have business units in the data storage market. In addition, Dell (DELL) is a competitor through its reseller partnership with EMC (EMC) (see below). In comparison to these corporations, NetApp is more focused on data storage technology, letting it develop hardware that uses raw storage space more efficiently, and complementing the hardware with more software packages. To compete with larger corporations, NetApp offers discounts to attract retailers. Smaller competitors in the high-performance market segment follows. In addition to the following companies, NetApp competes against venture capital-backed companies that also focus on developing advanced data storage technology.

  • EMC (EMC) - EMC is one of NetApp's most serious competitors, with business segments in information storage, content management and archiving, and RSA information security.
  • Brocade Communications Systems (BRCD) - Brocade sells data storage products that focus on storage area networks, a specific method of inputting data for storage that is subsumed by NetApp's hardware.
  • Data Domain Inc. (DDUP) - Data Domain specializes in data management technology, such as dedupliation and archiving services, as well as recovering data from disasters.
  • QLogic (QLGC) - QLogic sells data storage devices mainly to original equipment manufacturers.

References

  1. NTAP 10-K 2010 Item 1 Pg. 5
  2. 2.0 2.1 NTAP 10-K 2010 Item 6 Pg. 36
  3. 3.0 3.1 3.2 NTAP 10-K 2009 Item 7 Pg. 44
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