Aug. 15 (Bloomberg) -- Network Appliance Inc., the storage- computer maker whose shares have fallen 38 percent this year, forecast fiscal second-quarter sales that beat analysts' estimates. The stock rose 5.5 percent in extended trading.

Sales will be $752 million to $768 million, the Sunnyvale, California-based company said today in a statement. That topped the average estimate of $745 million in a Bloomberg survey.

The improving outlook follows a preliminary first-quarter report this month that fell short of the company's forecast and analysts' predictions. Network Appliance, whose customers include Oracle Corp. and the U.S. Army, said today that first- quarter net income fell as companies in the U.S. and Europe curbed spending.

``Things don't look as bad as some people thought,'' said Brent Bracelin, an analyst at Portland, Oregon-based Pacific Crest Securities. He rates the shares ``sector perform'' and doesn't own them. ``It's nothing more than them having a rebound after having reported a shortfall in the business.''

Network Appliance rose $1.34, or 5.5 percent, to $25.50 in extended trading. The stock gained 73 cents, or 3.1 percent, to $24.16 at 4 p.m. New York time in Nasdaq Stock Market trading.

The company will speed up stock repurchases and may buy as much as $500 million of shares in the second quarter, Chief Financial Officer Steven Gomo said on a conference call. The money will come from a new $1 billion program that Network Appliance announced today, adding to the $200 million remaining under an existing plan.

First Quarter

First-quarter net income fell 37 percent to $34.3 million, or 9 cents a share, from $54.7 million, or 14 cents, in the same period a year earlier. Sales rose 11 percent to $689.2 million in the three months ended July 27.

Chief Executive Officer Daniel Warmenhoven told analysts that an order backlog and bookings growth give him a ``high degree of confidence'' that the company will meet its second- quarter targets.

Network Appliance won't achieve the 30 percent-plus growth rates of previous quarters, Warmenhoven said. He said sales will be about $1 billion in the fourth quarter, indicating growth of about 25 percent.

Net income in the second quarter will be 16 cents to 18 cents a share, the company said. Analysts predicted second- quarter net income of 17 cents a share, according to a Bloomberg survey.

In May, Network Appliance forecast first-quarter profit and sales that missed analysts' estimates. On Aug. 2, the company said it didn't meet those targets, prompting the biggest decline in the shares in almost seven years.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: August 15, 2007 19:25 EDT