NetApp to cut 500 jobs

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NetApp to cut 500 jobs

Lower OEM sales hurt bottom line.

NetApp will lay off around 500 workers as the data storage provider struggles with lower sales to original equipment manufacturers (OEMs).

Its fourth quarter results today came in lower than analyst expected, sending its shares down more than 10 percent in extended trading.

It revealed the job cuts will affect around 4 percent of its global workforce. The workers will be let go by the third quarter, and the company expects to take a US$25 million to US$35 million charge as a result of the restructuring.

Most of the charges will be recognised in the company's first quarter.

NetApp has been trying to boost growth by focusing on cloud-based products as businesses cut spending on high-end storage systems.

It also faces competition from larger rival EMC and newer and cheaper flash-based storage technology vendors such as Nimble Storage and Pure Storage.

Net income fell to US$134.9 million for the quarter ended April 24, compared with US$197 million in the year-earlier quarter.

Revenue fell about 7 percent to US$1.54 billion.

Excluding items, the company earned 65 cents per share. Analysts were expecting adjusted earnings of 72 cents per share on revenue of US$1.59 billion, according to Thomson Reuters I/B/E/S.

For the first quarter, NetApp forecast a profit of 20 cents to 25 cents per share on revenue of US$1.28 billion to US$1.38 billion.

Analyst on average were expecting a profit of 59 cents on US$1.46 billion in revenue.

NetApp's shares closed at US$35.33 on the Nasdaq. They were trading down 8 percent at US$32.45 in after market trading.

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