NetApp cuts Q3 outlook, sees weakness in large accounts

NetApp cuts its third quarter outlook and saw "some unexpected weakness in a handful of our largest accounts" in the second quarter.

NetApp delivered better-than-expected fiscal second quarter earnings, but sales came in light relative to expectations due to "some unexpected weakness in a handful of our largest accounts." NetApp also cut its outlook for the third quarter.

The storage company reported second quarter earnings of $165.6 million, or 44 cents a share, on revenue of $1.51 billion. Non-GAAP earnings were 63 cents a share. Wall Street was looking for earnings of 59 cents a share on revenue of $1.53 billion.

Shares of NetApp took a hit afterhours after CEO Tom Georgens spooked investors with the following quote.

"In aggregate, we saw strong revenue growth across most areas of our business, offset by some unexpected weakness in a handful of our largest accounts."

The outlook was also worrisome. NetApp projected third quarter revenue between $1.52 billion and $1.61 billion, or 18 percent to 25 percent growth from a year ago. Sequentially, revenue growth will be between 1 percent and 7 percent. NetApp projected non-GAAP earnings of 56 cents a share to 60 cents a share.

Wall Street was expecting NetApp to report third quarter earnings of 63 cents a share on revenue of $1.63 billion.

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