Yahoo Finance Management Changes at NetApp; Q3 Guidance Reaffirmed
Shares of NetApp Inc. NTAP fell 2.8% to close at $24.69 on Jan 6, after the company announced that its Director, Chief Financial Officer (CFO), Nick Noviello, had resigned from his position with immediate effect. Jeffrey Bergmann, vice president of corporate finance, will take over as interim CFO, until the board of directors selects a successor.
Noviello became the CFO of the company in 2013. He resigned from his position to join as a CFO of privately held Blue Coat Systems Inc., a security and networking company.
During his initial days as CFO at NetApp, Noviello was accountable for the company’s finance, customer leasing, workplace resources and investor relations functions. From Jul 2013 onward, he became responsible for the information-technology group and further expanded his service to check on misappropriations of the company’s manufacturing operations in Apr 2014.
Bergmann has been appointed on an interim basis. He has been associated with the company since 2009 and served as vice president of global tax. Meanwhile, this storage and data management solutions provider will continue the search for a permanent CFO and Bergmann’s period of service may be extended on a monthly basis, if the company fails to appoint the new CFO within the deadline.
Based on his experience and expertise, we remain positive on Bergmann’s appointment during this transition period. We believe that he will do justice to the position of CFO and guide the company to new heights.
Following the management reorganization, NetApp seems to have clear visibility about its performance in the ongoing quarter. The company has consequently reaffirmed its guidance for the third quarter of fiscal 2016.
In particular, NetApp reiterated its adjusted net earnings guidance of 66 cents to 71 cents per share for the third quarter of fiscal 2016. The company also reaffirmed its revenue guidance of $1.40 to $1.50 billion (mid-point $1.45 billion). The Zacks Consensus Estimate for earnings and revenues stands at 52 cents and $1.45 billion, respectively.
More financial details about the company will be revealed during NetApp's third-quarter 2016 earnings release, which is scheduled for Feb 17, 2016.
Conclusion
We are optimistic about the management change and believe that this might help NetApp’s growth trajectory this year.
Going forward, the company is expected to gain momentum in flash-based solutions with the newly introduced all-flash array, which will help it gain traction in the storage market. The recent product launches and product refreshes will drive revenues and stringent cost controls will ensure margin expansion.
However, we believe that an uncertain IT spending outlook and competition from EMC Corp. EMC remain as headwinds.
NetApp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the technology sector are Amazon.com, Inc. AMZN and CyberArk Software, Ltd. CYBR, both sporting a Zacks Rank #1 (Strong Buy).
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