NetApp swings axe after poor Q4

Drops in revenue and income have forced NetApp to take steps to improve its performance with 500 staff in the firing line

Missing quarterly targets can sometimes have the result of triggering cuts that should indicate to investors that the management is serious about pulling back costs and turning fortunes around.

That has certainly been the reaction at NetApp, which is looking to generate up to $35m of restructuring charges as it swings the axe on 500 jobs, which is equivalent to around 4% of the storage player's workforce.

Fourth quarter results for the three months ended 24 April triggered the decision to shed some of the workforce with revenues of $1.54bn down by 6.7% on the previous year along with net income which fell to $135m from $197m.

“We are not satisfied with our fourth quarter results and are taking concrete action to transition NetApp for the next phase of growth,” said Tom Georgens, NetApp chairman and CEO.

“Clustered ONTAP is the foundation of a Data Fabric, our vision for the future of data management, which enables enterprises to realise the value of the cloud as a seamless extension of their on-premises environment. This vision is resonating well with customers and underpins our confidence," he added.

The firm was quick to make it pretty clear what that "concrete action" would look like in a filing to the SEC, which made it clear that it would be implementing staff reductions over the next few weeks.

"On May 19, 2015, NetApp, committed to a realignment designed to drive efficiency, eliminate cost and redirect resources to highest return activities.  The Company expects that the realignment will be implemented through the end of the third quarter of fiscal 2016 and will include changes to the Company’s worldwide headcount. As part of the realignment, the Company expects to reduce worldwide headcount by approximately 500 employees," the filing stated.

It added that the costs would range from $25 to $35m and also indicated the time table: "The Company expects to recognize the majority of these charges in the first quarter of fiscal 2016."

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