Network Appliance (Nasdaq: NTAP) dipped US$1.33 to $21.20 in morning trading Wednesday, after the company reported that fiscal fourth-quarter profit plummeted 98 percent.
Network Appliance said economic weakness has continued to spread to corporate investment in the computer data-storage storage market.However, the Sunnyvale, California-based company also said it believes the economic downturn has flattened and that corporate budgets are beginning to stabilize.
“While the fourth quarter was challenging, Network Appliance is strategically positioned for consistent, long-term future growth,” Network Appliance chief executive officer Dan Warmenhoven said.
In addition to slacking customer orders, Network Appliance said it has also faced stiffened competition from rivals EMC, Sun Microsystems, Compaq and IBM.
Network Appliance posted fourth-quarter revenue of $225.8 million, up 13 percent from the year-ago period, but down 22 percent from the $288.4 million in the third quarter.
Net income came totaled $500,000, compared to $24.5 million in the year-ago quarter.
Pro-forma earnings fell to $7.9 million, or 2 cents per share, from $24.9 million, or 7 cents per share, in the same period last year, meeting a First Call/Thomson Financial projection that had been revised downward.
In April, Network Appliance warned that fourth-quarter sales would fall 20 to 25 percent from the previous quarter, due to an overall economic slowdown and decreased sales in Europe. At the time, the company forecast operating earnings of 1 cent to 3 cents per share for the quarter ended last month, falling far short of analyst estimates 10 cents per share.
“As economic conditions improve, we believe information storage will lead the rebound in [information technology] spending,” said Warmenhoven. “We are poised to take advantage of the strong growth opportunities in both the enterprise storage and content delivery markets.”