NetApp replaces longtime CEO; shares tumble

Posted August 19, 2009 4:47 p.m. EDT
Updated August 19, 2009 10:23 p.m. EDT

— Data storage company NetApp Inc. (Nasdaq: NTAP) said Wednesday its fiscal first-quarter profit grew even as revenue inched lower, as proceeds from the cancellation of its failed buyout of Data Domain helped boost results.

The company also named Tom Georgens as president and CEO, replacing Dan Warmenhoven, effective immediately. The company said the transition is "the result of a management succession process."

In an interview with Reuters, Warmenhoven, 58, said he had planned to retire at age 60. he has run NetApp for 15 years.

"The economic issues of the past year have calmed down," he said. "The business is a little bit more predictable,"

Warmenhoven also raved about Georgens in an interview with Bloomberg.

“He’s wicked smart, and he’s very dedicated,” Warmenhoven said. “He’s just the perfect guy for the job.”

Despite the warm words, the unexpected news drove NetApp shares down 3 percent, or 76 cents, to $22.13 in after-hours trading.

NetApp employs some 700 people in Research Triangle Park, N.C.

Warmenhoven, a former executive at IBM, at one time lived in North Raleigh.

For the quarter ended July 31, NetApp earned $51.7 million, or 15 cents per share, up 49 percent form $34.7 million, or 10 cents per share, in the same period a year earlier.

Adjusted earnings were 22 cents per share in the latest quarter.

Revenue fell 4 percent to $838 million from $868.8 million.

Analysts, on average, were expecting a profit of 20 cents per share on sales of $828.3 million, according to a survey by Thomson Reuters. Analysts typically exclude one-time items from their estimates.

"Given the economic backdrop, NetApp performed well in the first quarter," Georgens said in a statement.

The quarter's operating expenses were lower than in the year-ago period, helped by proceeds from the termination of the Data Domain deal in which storage rival EMC defeated NetApp during a lengthy bidding war.

Shares fell 94 cents, or 4.1 percent, to $21.95 in after-hours trading. The stock had closed up 4 cents at $22.89.