NetApp Plans to Cut 600 Jobs Amid Weak Government DemandJordan Robertson
NetApp Inc. plans to cut 600 jobs, or about 5 percent of its workforce, as the maker of data-storage equipment grapples with slowing sales growth caused in part by declining demand from U.S. federal agencies.
The staff reduction will result in charges of $35 million to $45 million, mainly in the quarter that ends April 30, the Sunnyvale, California-based company said in a filing with the U.S. Securities and Exchange Commission yesterday.
NetApp’s revenue growth slowed to 1.6 percent in fiscal 2013, compared with an average 22 percent gain the previous three years, according to data compiled by Bloomberg. On its third-quarter earnings conference call last month, the company said a shortfall in federal information-technology spending was weighing down total revenue, and analysts estimate sales will be unchanged this fiscal year.
The job cuts will help NetApp focus on strategic initiatives and streamline “in light of the constrained IT spending environment,” the company said in the filing.
NetApp shed 900 jobs last year after coming under pressure from activist investor Elliott Management Corp., the hedge fund run by billionaire Paul Singer, which had taken a significant stake in the company.
The shares of NetApp rose 1.1 percent to $37.85 at yesterday’s close before the announcement. They have fallen 8 percent so far this year.