Details of the proposed purchase were outlined after NetApprevealed fiscal Q4 revenues of $880m, down 6% year-on-year and an 11.7%increase in profits to $103m, boosted by rises in software and services sales.
Dan Warmenhoven, NetApp CEO, said in a call with analysts itplanned to operate Data Domain as a separate product line and management and development organisation when the deal closes in 60 to 120 days.
“We see a lot of cross-sell and up-sell opportunities,” hesaid, “with less than 6% overlap on our existing storage 5,000 accounts, thecombination of our two companies should help us increase penetration within ourcustomer base”.
The similar nature of the product models – both have asoftware solution wrapped around standard commodity components – would speedand smooth the transition, said Warmenhoven.
In a statement, Frank Slootman, CEO at Data Domain, saidNetApp’s distribution channel and customer base would accelerate sales.
The companies were unable to make additional comments beforethe deal closes.
During NetApp’s final three months of fiscal 2009, productrevenues fell 20% year-on-year to $506m, while software and services sales wentup 21% and 22% respectively to $165m and $210m.
Steve Gomo, CFO at the firm said it had seen a “markedincrease” in the number of one year renewals of software entitlements andservices maintenance contracts.
“Many customers looked to defer capital purchases and extendthe life of their current systems during the economic downturn and as a resultcurrent period purchases of systems slowed,” he said.
The firm said the restructuring plans announced at the beginningof Q4 in terms of spending and headcount reduction were “tracking to ourexpectations”. The number of employees fell by 407 in the quarter to 7,976worldwide.
Despite the bold move to buy Data Domain and improving signsin the market - based on sequential increases in revenues and resurgence inmid-range and enterprise accounts - the company was less daring on fiscal Q1predictions.
“Given the limited visibility that persists in the macroenvironment we will not provide revenue guidance for the first [fiscal]quarter,” said Gomo.