NetApp's regeneration could be deep surgery or anti-wrinkle cream Analysis NetApp's long story short – customers aren't buying the old stuff and don't like the new stuff much either. In its second fiscal 2017 quarter, revenues of $1.34bn were 7.6 per cent down on $1.45bn the year before. They were 3.9 per cent higher than Q1 2017's, though. Profits (net income) of $109m were 4.4 per cent …
NetApp had its share lead in the market. However, if you keep working with no much innovation in the same market with too much competition you can only grow in single digit. Even EMC results were evident.
However, its the other players like Cohesity, Nutanix etc. who have created a new market space for themselves are growing in double digits. Even traditional players like VMware etc. have opened into new market place to offset their matured product lines. NetApp has lots of catch up to do.
This is not your Grandpa's NetApp. NetApp cares about stock price because that's how a lot of these empty suits get paid. As long as the stock price is high they'll keep beating the same drum regardless of top line revenue. They don't give a crap about their customers any more. It's all about the stock and the price and you better believe it!
I don't suppose NetApp has considered making (or buying) solutions people actually want to buy? Additional question: have they thought about making (or buying) solutions people will want to buy tomorrow, instead of solving the problems of nine years ago two years from now?
Just thoughts...
NetApp doesn't care what people want to buy. NetApp knows what's best for the customer. What's best for the customer starts with C- and ends with -DOT.
Fun aside - as the new chief WAFLer has explained- "being late to market means you can build a better product" ... which in the case of NetApp- nobody wants to buy.
To be fair - we cannot put all the blame on product alone. We all know that people are the organisations most valuable assets. When sales are up - nobody seems to care. But with sales down NetApp might now start looking at their "middle-leadership team" - instead of laying off the people in the trenches.
NetApp has done well in reducing expenses via workplace "transformation" which is the marketing term for layoffs. However, they are now in a place where they can no longer continue to do so because they have already been cutting into muscle.
They now have to show top line growth and not just transitioning their own base from disk to flash which is how they've gotten to that market share.
However, the most important aspect is how they have gone about that transition. The "how" is indicative by an abysmal product margin of 48% indicative of a non-competitive product and very deep discounting.
So it'll be interesting to see how Mr. Kurian delivers real growth in terms of new customers and better product margin which was something he was pressed on by analysts.
It is my opinion NetApp's struggles will be returning and will be even more pronounced than ever before.
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