On The Fly: What to watch in NetApp's earnings report

NetApp (NTAP) is scheduled to report results of its fiscal fourth quarter after the market close on Wednesday, May 24, with a conference call scheduled for 5:30 pm ET. What to watch for: 1. GUIDANCE: Along with its last report, NetApp said it expects Q4 earnings per share in the range of 79c-84c on revenue of $1.365B-$1.515B. At the time, analysts expected the company to report EPS of 78c on revenue of $1.4B, but those figures have since risen to 82c and $1.44B, respectively. In addition, NetApp said at its Financial Analyst Day in early April that it expects to return to revenue growth in the second half of 2017. 2. GROSS MARGIN/NAND: On its Q3 earnings conference call, NetApp guided for Q4 operating margin in the range of 18.5%-19.5%. The company said that the gross margin guidance view "incorporates some conservatism due to NAND cost increases" and that the company is "confident" in its ability to meet demand in flash, as it has secured enough NAND to meet he anticipated demand for the remainder of the fiscal year. 3. SOLIDFIRE'S WRIGHT LEAVES: In late April, the Register reported that David Wright, chief executive officer of SolidFire, left NetApp less than 18 months after his company has taken over by NetApp. Val Bercovici, NetApp's CTO at SolidFire, also resigned in April to establish a startup and has confirmed that Wright is no longer with the company, the report said. Commenting on the report, Raymond James analyst Simon Leopold said at the time that Wright's departure is an incremental concern, though not surprising given his background as an entrepreneur. Leopold noted that Wright was discussing and promoting NetApp's hyper-converged platform and was disappointed when the analyst day did not provide a launching pad to introduce his platform, leading to speculation that the launch may still be some time away. The analyst added that Wright's exit makes him incrementally concerned about a possible delay.