Third-quarter turnover dip forces NetApp to axe staff

Six per cent of NetApp's 8,000-strong workforce face the axe

Storage giant NetApp has announced a drop in quarterly turnover and plans to chop back six per cent of its workforce.

Fiscal third quarter turnover fell 15.5 per cent year-on-year to $746.3m (£524.4m) compared with $884m for the same period a year ago, missing predicted estimates of $912.5m.

As a result, the vendor has announced that six per cent of its 8,383 employees will face the axe to maintain profitability during a time of falling sales. It will take about $30-35m in restructuring charges in its present quarter.

GAAP net loss for the three months to 23 January was $75m compared with GAAP net profit of $102m for the same period in the prior year.

On the job cuts, Dan Warmenhoven, chairman and chief executive of NetApp, said: “We needed to make further reductions in order to optimise our resource allocation for our strategic growth initiatives. Therefore, we have implemented a restructuring that unfortunately includes the elimination of approximately six per cent of our global workforce.

“While this was a very difficult decision, we believe our actions will best position the company for additional market share gains in the future.”

Warmenhoven explained that business levels softened in January as many customers’ budgets contracted, resulting in lower revenues than expected.

“At the same time, our storage efficiency value proposition resonates in challenging economic times, and we gained a record number of new customers during the quarter,” he said.

GAAP turnover for the first nine months of the current fiscal year totalled $2.5bn compared with $2.4bn for the same period last year, an increase of seven per cent year-on-year.