NetApp has
put $1.5bn on the table to buy de-duplication specialist
Data
Domain as consolidation among storage vendors continues
unabated, writes Paul Kunert of Microscope.
Details of the proposed purchase were outlined after NetApp
revealed fiscal Q4 revenues of $880m, down 6% year-on-year and an
11.7% increase in profits to $103m, boosted by rises in software
and services sales.
Dan Warmenhoven, NetApp CEO, said it planned to operate Data
Domain as a separate product line and management and development
organisation when the deal closes in 60 to 120 days.
“We see a lot of cross-sell and up-sell opportunities,” he said,
“with less than 6% overlap on our existing storage 5,000 accounts,
the combination of our two companies should help us increase
penetration within our customer base”.
The similar nature of the product models – both have a software
solution wrapped around standard commodity components – would speed
and smooth the transition, said Warmenhoven.
In a statement, Frank Slootman, CEO at Data Domain, said
NetApp’s distribution channel and customer base would accelerate
sales.
The companies were unable to make additional comments before the
deal closes.
During NetApp’s final three months of fiscal 2009, product
revenues fell 20% year-on-year to $506m, while software and
services sales went up 21% and 22% respectively to $165m and
$210m.
Steve Gomo, CFO at the firm said it had seen a “marked increase”
in the number of one year renewals of software entitlements and
services maintenance contracts.
“Many customers looked to defer capital purchases and extend the
life of their current systems during the economic downturn and as a
result current period purchases of systems slowed,” he said.
The firm said the restructuring plans announced at the beginning
of Q4 were “tracking to our expectations”. The number of employees
fell by 407 in the quarter to 7,976 worldwide.
Despite the bold move to buy Data Domain and improving signs in
the market - based on sequential increases in revenues and
resurgence in mid-range and enterprise accounts - the company was
less daring on its forthcoming Q1.
“Given the limited visibility that persists in the macro
environment we will not provide revenue guidance for the first
[fiscal] quarter,” said Gomo.
This story first appeared on
Microscope.co.uk