NetApp disappoints as OEM sales slide

Sales to OEMs down almost a quarter in Q3

A sharp slump in sales to OEM partners meant NetApp failed to grow in Q2, disappointing Wall Street.

For the three months to 24 October, net profit at NetApp fell 4.2 per cent annually to $159.8m (£101.47m) on sales which were down a fraction – 0.4 per cent – over the same period to $1.54bn.

According to Reuters, analysts expected sales to come in between $1.56bn and $1.62bn last quarter, which meant the firm's shares tumbled three per cent in extended trading last night.

NetApp's OEM business dragged the firm down in Q2, dropping 22 per cent year on year to $119m.

Indirect revenue, which consists of channel and OEM sales – made up 80 per cent of the company's sales figure last quarter. Excluding the slump in its OEM business – which sees NetApp flog its kit to the likes of Oracle and Bull – indirect sales were flat year on year.

NetApp chief executive Tom Georgens remained optimistic about his company's performance.

"We are pleased with our competitive position and performance in the first half of the year, but... it's important to recognise that we continue to operate in a challenging environment," he said.

"We have all seen the headlines of macroeconomic uncertainties; Russia, the European economy, FX headwinds, but more fundamentally our industry is in transition.

"Enterprises must manage their existing infrastructure and meet the growing demands of the business while at the same time adopting new technologies and delivery options."