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Networking major Cisco Systems ( CSCO - Analyst Report ) joined hands with NetApp ( NTAP - Snapshot Report ) , 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 currently carries a Zacks #3 Rank (short-term Hold recommendation).
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