NetApp's profit outlook disappoints, shares fall

NetApp Chief Executive Tom Georgens said the company failed to keep up with demand for its new "FAS3200" storage systems, due to a shortage of some semiconductor components.

The company forecast fiscal fourth-quarter profit, excluding items, of 49 to 53 cents per share. Analysts had expected 54 cents per share, according to Thomson Reuters I/B/E/S.

He said the weaker-than-expected outlook was no indication of a slowdown in sales or a decline in market share.

"Clearly we are continuing to gain share," he told Reuters.

"While disappointing in the near term, we remain optimistic as demand is very strong," he said, adding the company was trying to catch up with demand.

Under Georgens, NetApp has gained share from rivals, moving from No. 5 in the corporate data storage equipment market to No. 3 behind EMC Corp (EMC.N) and International Business Machines Corp (IBM.N), according to market researcher IDC.

Net profit for the third quarter that ended January 28 rose to $172 million from $108 million a year earlier. Excluding items, profit per share was 52 cents per share, beating the average Wall Street forecast of 50 cents a share.

Third-quarter revenue rose to $1.27 billion from $1.01 billion a year earlier.

NetApp shares fell 4 percent to $56.01 in extended trading after closing at $58.54 on Nasdaq.

They had risen over 15 percent since the start of the year, and traders had said they had priced in strong earnings growth.

The popularity of online video and the switch to digital data in various businesses are generating huge amounts of online traffic. That, in turn, is seen boosting demand for effective storage products and "cloud computing" -- accessing remote computing power and data over the Internet.

Dealmaking in the storage sector heated up last year as EMC, IBM, Dell Inc (DELL.O), Hewlett-Packard Co (HPQ.N) and Oracle Corp (ORCL.O) began jostling for dominance.

HP bought 3PAR for $2.4 billion after a heated battle with Dell, while Dell later announced plans to take over Compellent Technologies Inc for close to $1 billion. IBM has bought Netezza Corp for $1.7 billion and EMC bought NetApp rival Isilon Systems for $2.3 billion.

The company said it would be acquisitive, without being specific, but added there was no pressure for it to do deals in the near term as it was managing to expand market share on its own.

(Reporting by Ritsuko Ando; Editing by Richard Chang, Gary Hill)