Is NetApp CEO George Kurian turning around the storage co?

NetApp
Enterprise storage company NetApp posted revenues of $1.4 billion and net income of $146 million in the third quarter of fiscal year 2017.

Following challenges due to executive turnover, CEO George Kurian’s approximately one and a half year tenure at NetApp has enabled the company to execute on longer-term strategies. Its strategies included the acquisition of SolidFire to improve NetApp’s position in the flash storage market, cut in headcount, and efforts to address modern workload demands, according to Technology Business Review.

“The transformation of NetApp is yielding solid results and has changed the trajectory of our business. With our portfolio of solutions and Data Fabric strategy, NetApp is well positioned to lead in the next era of IT,” said George Kurian, chief executive officer of NetApp.

# All-flash array annualized net revenue run rate almost $1.4 billion (+160%)

# Shipped nearly 300 petabytes of flash

# Clustered Data ONTAP managing 50 percent of installed base capacity

“NetApp’s core OPTAP operating system is another integral piece of its modernization strategy, as it is an enabler of many of the modernization efforts NetApp has sought to capitalize on during 2016,” said Stephanie Long, research analyst at TBR.

Due to NetApp’s restructuring efforts, and its focus on key portfolio assets, including its flash storage capabilities and its data fabric solution, NetApp achieved growth for the first time in nearly three years, growing 1.3 percent to $1.4 billion.

Gross margin declined 110 basis points to 60.6 percent of revenue. NetApp also achieved operating margin gains, increasing 110 basis points to 13 percent of revenue.

TBR says NetApp’s performance indicates that it has the strategic pieces in place to continue improving sales performance, but that its restructuring efforts are not quite over.

NetApp’s commitment to improve its cost structure, as well as market shifts toward software-defined capabilities will improve gross margins in the long-term, but there is a delicate balance NetApp must find, as storage hardware is a key piece of its portfolio and subsequent success.

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