NetApp to Cut Jobs While Paying Dividend, Buying Shares
NetApp Inc. (NTAP), the data-storage company under pressure from an activist investor to boost shareholder value, said it’s cutting jobs and planning to return cash through stock buybacks and dividends.
The company increased its stock-repurchase program by $1.6 billion, bringing the total to $3 billion over three years. NetApp initiated a quarterly dividend of 15 cents a share, the Sunnyvale, California-based company said yesterday in a statement. It’s also eliminating 900 jobs.
Elliott Management Corp. took a significant stake in NetApp and is pressing the company to change its board and study ways to boost shareholder value, people familiar with the situation said last week. While NetApp is positioned to benefit as businesses store and manage more data on the Web, the company’s technology hasn’t kept up with that of larger rivals.
“We commend the positive steps taken by NetApp today to improve both the capital and cost structure at the company,” Jesse Cohn, portfolio manager at New York-based Elliott Management, said yesterday in an e-mailed statement. “As a significant shareholder, Elliott believes NetApp is a highly valuable and strategic company and we look forward to the company’s continued commitment to creating shareholder value.”
Elliott owns about 16 million NetApp shares, according to Cohn.
NetApp’s forecasts for results in the current quarter, also released yesterday, underscored the company’s challenges. Sales will be $1.48 billion to $1.58 billion in the fiscal first quarter, NetApp said. Analysts were predicting on average $1.60 billion, according to data compiled by Bloomberg. Profit excluding certain items will be 45 cents to 50 cents a share, shy of the 53-cent average estimate of analysts.
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