What: Shares of NetApp Inc. (NASDAQ:NTAP) were moving higher today as the data storage provider blew past estimates in its first-quarter earnings report. As of 11:41 a.m. EDT, the stock was up 16.3%.
So what: NetApp's per-share earnings rose from $0.29 a year ago to $0.46, easily topping expectations at $0.36. Revenue fell 3% to $1.29 billion, but that beat the consensus at $1.26 billion.
CEO George Kurian said, "We are pleased with our first quarter results. Our focus on disciplined execution of our strategy is yielding results and starting to change the trajectory of our business."
The systems industry has seen a decline in revenue in recent years as hardware sales have slowed, but NetApp's strategic shifts seem to be mitigating the effects of that as the company has cut back on operating expenses, including a 13% reduction in sales and marketing expenses.
Now what: Looking ahead, the company sees revenue of $1.265-$1.415 billion for the current quarter and adjusted EPS of $0.51-$0.56. That compares to a consensus of revenue of $1.33 billion and EPS of $0.54, and the company's projection still represents a decline from the year before. NetApp also reduced research and development expenses by 15%, a sign that the company may not be making the investments needed to bring revenue growth back.
While today's report was certainly encouraging for investors, the long-term picture still looks muddled for NetApp.