Anniversary: NetApp 25-Year Old

NetApp, Inc., a public Delaware corporation based in in Sunnyvale, CA, is 25-year old, being founded in 1992 by David Hitz, James Lau and Michael Malcolm, Hitz, formerly six years at Auspex Systems, being the only one remaining in the company as EVP.

At that time, major competitor was Auspex Systems, founded in 1987 by Larry Boucher, who was previously CEO of Adaptec, and invented the first NAS but was finally in bankruptcy in June 2003.

In 1994, NetApp received venture capital funding from Sequoia Capital and had its IPO in December 1, 1995, raising an undisclosed amount.

The firm offers storage software, storage systems and services to manage and store data, including its proprietary Data ONTAP OS.

NetApp thrived in Internet bubble years of the mid 1990s to 2001, the company growing to $1 billion in annual revenue. After that, revenues quickly declined to $798 million in FY02. It surpasses $2 billion in FY06, $3 billion in FY08, $5 billion in FY11, $6 billion in FY12. From FY13 sales were continually down until last complete fiscal year (FY17).

Historically NetApp recorded excellent profitability profitable for each 22 years being public but two (FY95 and FY02) with a small amount. (see table below)

Revenue stabilizes last fiscal year with introduction of hybrid and all-flash arrays to compensate legacy products.

From the beginning there was a big battle with EMC and continuing up to now, but this latter, unbeatable, was always in front of NetApp in term of storage revenue, even it ranked in the Fortune 500 since 2012. In our top 9 in sales for storage companies corresponding to their respective FY ending in calendar 2016, NetApp was classified number 5 following WD, Micron, Seagate and Dell/EMC.

In FY17, revenue of $5,519 million was split between $3,006 million in products (54%), $965 million in software maintenance (17%) and $1,548 million in hardware maintenance and other services (28%). By region, it was 56% in Americas, 30% in EMEA and 13% in AsiaPac.

In 2011, allegations surfaced that NetApp products were sent to Syria in violation of U.S. export laws. But on April 7, 2014, the vendor was notified by the Department of Commerce, Bureau of Industry and Security, that it had completed its review of this matter and determined that NetApp had not violated the U.S. export laws.

NetApp has only three CEOs in 25 years:

• Daniel J. Warmenhoven, the first one who did a great job from 1994 to 2009 when FY09 revenue only increased 3%.
• Tom Georgens, from 2009 to 2015, after two years of declining sales
• George Kurian since 2015 with also two years with sales going down but better results in the first two quarters of FY18.

Annual revenue and next income (loss) in $ million

All acquisitions of NetApp
NetApp acquired only 19 companies since 2000, a very small figure compared to rival EMC. On the other side, in 2006, it sold its NetCache product line to Blue Coat Systems.

Stock performance since becoming public