NetApp cuts outlook for fiscal Q1, fiscal 2020

The company said it remained confident that it had the right strategy, but sales are falling well short of expectations.

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NetApp said its revenue will fall short of expectations in its fiscal first quarter and the company also cut its outlook for fiscal 2020.

The storage vendor said that its first quarter revenue will be between $1.22 billion and $1.24 billion, down 17% from a year ago. That decline includes enterprise software license agreements that didn't repeat. Excluding those agreements, sales would be down 12%.

NetApp added that its first quarter non-GAAP earnings will be 55 cents a share to 60 cents a share and 30 cents a share to 35 cents a share net.

The previous guidance from NetApp called for revenue of $1.31 billion to $1.46 billion in the first quarter with a range of 78 cents a share to 86 cents a share on a non-GAAP basis. Wall Street was expecting first quarter sales of $1.39 billion with non-GAAP earnings of 83 cents a share. NetApp had already delivered light guidance in the fourth quarter. 

CEO George Kurian said that the company was disappointed with the results, but remained confident about the hybrid and multicloud strategy. Kurian said:

Our customer conversations indicate that our hybrid multicloud portfolio of solutions is the right one. We believe we can return to growth over time by prudently reallocating investments to expand sales coverage and accelerate our participation in the growing Private Cloud and Cloud Data Services markets.

For fiscal 2020, NetApp now expects revenue to be down 5% to 10% from fiscal 2019. NetApp had said fiscal year 2020 revenue would grow in the mid-single digit range.