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Netapp to lay off 12 per cent of workforce

NetApp is looking to lay off 12 per cent of its workforce in order to concentrate its business on flash memory arrays. However it is hardly coincidental that this decision follows weak 3rd quarter sales and missed targets.

In order to fund the redundancies, Netapp is putting aside funds of $60 - 70 million, it said in a regulatory filing. NetApp said it would restructure to cut expenses and cut 12 per cent of its workforce through the first quarter of fiscal 2017. Most of those charges will be taken in the fourth quarter.

In an earnings release, NetApp CEO George Kurian said: "To position NetApp for long-term success, we launched a transformation program designed to streamline the business and reduce our cost structure, while at the same time, maintaining our ability to invest in strategic opportunities. We are confident that we have the right strategy to further pivot the company toward the growth areas of the market and deliver long-term value."

The restructuring comes after a mixed quarter with Netapp failing to reach its targets. Wall Street was looking for third quarter earnings of 68 cents a share on revenue of $1.45 billion.
However Netapp’s reported third quarter earnings of $153 million, or 52 cents a share, on revenue of $1.29 billion, fell short of expectations.

With the restructuring, NetApp is looking to focus on all-flash equipment hence its recent acquisition of SolidFire. The company, is also looking to shift its business focus towards software, which is a common trend in the technology industry but will face stiff competition.