#NetApp is scheduled to report its fiscal Q4 earnings on Wednesday, May 24. Through the course of last year, NetApp has witnessed a decline in net revenues driven by low product sales. Moreover, low demand for storage hardware coupled with falling prices led the company-wide gross margin to compress by 10 basis points to just under 61% for the three quarters combined. Comparatively, NetApp’s services and software maintenance revenues have improved to offset the decline from product sales. We have a $37 price estimate for NetApp, which is slightly lower than the current market price. Guidance For Q4 FY’17 NetApp’s management expects a steady 4-5% growth in net revenues to around $1.45 billion in the fourth fiscal quarter. Despite revenue growth, gross margin could continue to be low due to pricing pressure on product sales. As a result, NetApp’s non-GAAP gross margin for the fourth quarter could be around 10 basis points lower on a y-o-y basis at 61%. Comparatively, the company anticipated long-term margins of around 62-64% through the end of the decade.
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