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Network Appliance hits expectations

The data storage company meets Wall Street expectations today for its quarterly earnings, with revenues driven by a sales surge in Asia and Europe.

Network Appliance, a company with a new approach to data storage, met Wall Street expectations today for its quarterly earnings, with revenues driven by a sales surge in Asia and Europe.

Network Appliance posted net income of $9.4 million, or 12 cents per diluted share, for the third quarter of fiscal 1999, compared to $5.6 million, or 8 cents per diluted share, for the like quarter a year ago. The earnings today matched the consensus expectations of financial analysts, according to First Call.

A total of 92 percent of the company's $199 million revenue came from its mainstay "filer" product, a high-speed "storage appliance" that can plug into Windows and Unix networks simultaneously, Chief Executive Daniel Warmenhoven said.

The rest of the company's revenue came from its year-old NetCache machines, appliances that make it easier for companies to keep up with demand for Web pages. Network Appliance also sells NetCache as a software product that can be installed on Unix or Windows NT servers.

Network Appliance hardware runs on Alpha 21164 chips, Warmenhoven said. But much of the company's effort has focused on the specialized software tailored to allow fast disk access.

He declined to say whether the company would adopt the next-generation 21264 chip, now emerging in Compaq workstations and servers. "We can't disclose future products," he said.

Revenues grew 72 percent over the same quarter last year. "It was a very good quarter," Warmenhoven said, although the company's year-over-year revenue growth has never dipped below 70 percent since it became publicly traded in late 1995.

The company's stock dropped 9 percent in trading today, before the company announced its results, dropping 4.0625 to close at 41.8750. Warmenhoven attributed the drop to the overall dip in the technology-rich Nasdaq market, where Network Appliance stock is traded.

Last year, the company increased its push to have its filers accepted in organizations with a mixed Unix and Windows NT, he said. For the most recent quarter, 40 percent of the filer revenue came from Unix-only environments, 45 from mixed environments, and 8 percent from Windows-only environments.

Last year, the company signed agreements with Dell Computer and Fujitsu under which the computer companies will sell and support Network Appliance filers in their product line.