Networking major
Cisco Systems
(
CSCO
) joined hands with
NetApp
(
NTAP
), to introduce a new cloud product, which is expected to help more
customers accelerate their transition to the cloud. The companies
recently announced plans to extend the FlexPod with a series of new
pre-validated design architectures priced and sized for smaller
workloads.
This new FlexPod series is built on the background of a
flexible, scalable, shared infrastructure that combines
technologies such as computing, networking and storage solutions
offered by the tech major.
The entry level flexpod offered by the tech major, has the
offering price and scale that is best suited for the business
application workloads having 500 to 1000 users, and provides
solution that help customers to invest only in infrastructure
required for simple and rapid scaling to meet growing demands as
different companies have different business needs.
This new flexpod has gained in popularity since the companies
joined hands to first launch it in November 2010. Now, the FlexPod
is available worldwide through more than 500 FlexPod partners and
more than 850 customers use FlexPod for their data center
infrastructure - which has resulted in staggering growth of 400% in
less than a year.
Although new product launches and collaborations work in favor
of the company, NetApp is in a vulnerable position due to its
significant exposure to Europe (roughly 33% contribution) and the
U.S. public sector (~15%). These two sectors are fighting with debt
issues and constrained budgets, respectively, impacting NetApp's
revenue growth trajectory.
NetApp's third quarter's results were modest, with the bottom
line missing the Zacks Consensus Estimate, while the top line
matched. Despite a high year-over-year revenue growth, NetApp
posted a bottom-line decline, which was mostly due to higher costs
and tax. Moreover, management guided its next quarter cautiously,
keeping in mind the ongoing macro uncertainty caused by the
European debt crisis, federal budget cuts and Thailand flood (which
is limiting component availability).
But we believe that NetApp will be able to sustain its growth
story and remain a key player in the virtualization and network
storage market based on product launches and strategic
acquisitions. With its latest Engenio takeover, NetApp will now be
able to address the video storage market as well as high
performance computing applications like genomics sequencing.
NetApp is performing impressively, despite macro concerns and
stiff competition from industrial heavyweights like
IBM Corp.
(
IBM
) and
EMC Corporation
(
EMC
).
NetApp currently carries a Zacks #3 Rank (short-term Hold
recommendation).
CISCO SYSTEMS (
CSCO
): Free Stock Analysis Report
EMC CORP -MASS (
EMC
): Free Stock Analysis Report
INTL BUS MACH (
IBM
): Free Stock Analysis Report
NETAPP INC (
NTAP
): Free Stock Analysis Report
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