NetApp Inc (NTAP) Stock Price Plunges 10% After Company Plans To Lay Off 500 Employees

Shares of NetApp Inc. (NASDAQ:NTAP) tumbled nearly 10 percent Wednesday in after-hours trading after the data management software company announced it plans to lay off around 500 employees globally, or roughly 5 percent of its workforce, as part of a restructuring deal. NetApp’s stock lost 9.5 percent Wednesday to trade as low as $31.75 in extended-hours trading, well below its 52-week low of $33.66.

The Sunnyvale, California, company, said it plans to eliminate the positions by the company’s fiscal third quarter and expects to record a charge of $25 million to $35 million related to the cuts, the company said in an 8-K filing with the Securities and Exchange Commission Wednesday.

“We are not satisfied with our fourth quarter results and are taking concrete action to transition NetApp for the next phase of growth,” Tom Georgens, chairman and CEO of NetApp, said in a statement Wednesday.”

The data storage equipment maker also posted disappointing earnings results Wednesday, as the company’s profit and revenue missed Wall Street forecasts.

For the quarter ended April 24, NetApp reported fiscal fourth-quarter net income of $134.9 million, or 43 cents per share, as revenue fell 7 percent to $1.54 billion, compared with a profit of $197 million, or 59 cents per share, on sales of $1.65 billion during the same period a year ago.

The company expects to recognize the majority of the charges related to job cuts in the current quarter and forecasts revenues to be in the range of $1.275 billion to $1.375 billion. The company also expects to record a net loss in the range of 6 cents per share to 11 cents per share in the current quarter.

NetApp also boosted its dividend for the company's quarter ended July 2015 by 9 percent, to 18 cents per share.

NetApp's restructuring efforts are aimed to drive efficiency, eliminate costs and redirect resources to "highest return activities," by focusing on cloud-based products, the company said in an 8-K filing. NetApp also said its cloud ONTAP software shipments grew 163 percent annually.

“Clustered ONTAP is the foundation of a Data Fabric, our vision for the future of data management, which enables enterprises to realize the value of the cloud as a seamless extension of their on-premises environment. This vision is resonating well with customers and underpins our confidence,” Georgens said.

Shares of NetApp have lost nearly 15 percent so far this year, as of the close of trading Wednesday.