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February 18, 2016updated 31 Aug 2016 5:20pm

NetApp to slash 12% of workforce as profit falls in Q3

News: The company launched a transformation programme to streamline the business and reduce cost structure.

By CBR Staff Writer

Computer storage and data management firm NetApp is planning to lay off 12% of its workforce, which equates to nearly 1,500 employees.

The layoffs are part of a restructuring effort to streamline the company’s core business and reduce operating expenses.

NetApp will implement the reduction in workforce through the end of the first quarter of fiscal 2017. The company expects to incur charges of about $60m to $70m for employee terminations and other costs related with the restructuring.

The company has reported lower-than-expected revenue and profit for the third quarter of fiscal year 2016, ending 29 January.

Net revenues for the quarter fell to $1.39bn from $1.55bn last year, as product revenue dropped 19%. Net income declined to $153m, or $0.52 income per share, from $177m, or $0.56 income per share, a year earlier.

During Q3, the company returned $137m to shareholders via share repurchases and a cash dividend.

The company expects fourth quarter revenues between $1.35bn to $1.50bn and GAAP earnings per share in the range of $0.12 to $0.21 per share.

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NetApp CEO George Kurian said: "NetApp’s third quarter results demonstrate good progress in advancing our strategy and strong operational execution despite the challenging macroeconomic environment.

"To position NetApp for long-term success, we launched a transformation programme designed to streamline the business and reduce our cost structure, while at the same time, maintaining our ability to invest in strategic opportunities."

Earlier this month, NetApp acquired flash storage and software development firm SolidFire for $870m.

The company has incorporated SolidFire products into its data fabric strategy to provide data management across flash, disk and cloud resources.

Last month, NetApp unveiled organisational changes to streamline the structure and enable focused execution in driving efficiency and velocity in the business.

The company has appointed Jeffrey Bergmann as interim CFO. Bergmann served in finance leadership positions at NetApp for six years.

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