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Will NetApp's Earnings Keep It in Play?

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On Tuesday, NetApp (NASDAQ: NTAP  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

NetApp specializes in network storage solutions, and with the increasing importance of collecting and analyzing data, NetApp's products have become increasingly vital in helping customers make the most of the information they gather. Let's take an early look at what's been happening with NetApp over the past quarter and what we're likely to see in its quarterly report.

Stats on NetApp

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$1.76 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can NetApp's earnings keep climbing this quarter?
Analysts have stayed firm in recent months on their views of NetApp's earnings prospects, with no change to their estimates for either the most-recent quarter or the fiscal 2014 year. The stock has made modest gains of between 5% and 6% since mid-February.

In general, NetApp has done a good job of producing solid growth recently. By tapping into the Big Data trend, NetApp has been able to raise its revenue by nearly 60% and boost net income by more than 50% between 2010 and 2012, with its focus on incremental market-share gains paying off for the company.

Yet NetApp certainly doesn't have the industry to itself. In February, rival EMC (NYSE: EMC  ) announced earnings that showed a big bounce from past weakness, with an 8% gain in revenue that doubled NetApp's growth rate over the same period. As EMC continues to boost its margins and profitability with an increased focus on high-end products, NetApp will have to counter EMC's moves to sustain its competitive position in the space.

One interesting conjecture is the idea that NetApp could be an acquisition target. Although Oracle (NYSE: ORCL  ) recently made a big buyout in picking up Acme Packet, adding NetApp's Big Data exposure to its broad-reaching IT business would give Oracle a leg up in its fight against other tech giants, many of which are using the same strategy of seeking to expand with wider offerings of services. In addition, news last week that activist investor Elliott Management had taken a sizable stake in NetApp and might seek internal changes that would include a potential return of capital to shareholders could make the stock look even more attractive.

In NetApp's quarterly report, make sure to watch for the company's planned strategy for taking advantage of the increasing focus on Big Data. With such a monumental opportunity, NetApp has to step up and take full advantage of the good times for the company while they last.

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