Data storage equipment maker NetApp Inc
NetApp said President and Chief Operating Officer Tom Georgens, 49, would succeed Dan Warmenhoven, 58, as chief executive, effective immediately. Warmenhoven, who has been CEO for 15 years, will stay on as executive chairman.
The shift comes after NetApp lost a high-profile bidding war for specialty data storage technology company Data Domain Inc
Canaccord Adams analyst Paul Mansky said investors had broadly anticipated the executive shift on the horizon, but that it had caught many off guard.
People may be misreading it to mean that it may take the company longer to return to traditional operating levels and/or that there's less of a near-term (merger and acquisition) opportunity out there, Mansky said.
In an interview, Warmenhoven said the timing was right for him to step down.
The economic issues of the past year have calmed down. The business is a little bit more predictable, Warmenhoven said, noting he wanted to step down as he turned 60.
In addition to the surprise management change, the company also disappointed some by abstaining from providing any quarterly outlook, Mansky said.
If the demand environment has broadly gotten better .. there becomes that explicit expectation that they bring quarterly guidance back, Mansky said.
NetApp's fiscal first-quarter net profit rose 49 percent to $51.7 million, or 15 cents per share, compared to $34.7 million, or 10 cents, a year earlier.
Excluding items, NetApp earned 22 cents per share, above the average analyst forecast of 20 cents per share, before items, according to Reuters Estimates.
NetApp's revenue fell 4 percent to $838 million, beating the average analyst forecast of $829 million.
Sunnyvale, California-based NetApp had sought to stimulate sluggish sales by acquiring fast-growing Data Domain, whose technology helps companies save money by weeding out duplicate data and saving precious disk space.
Analysts have said that NetApp needs to do another acquisition to kickstart revenue growth, but Georgens said in an interview that while the company is interested in additions to its portfolio, it has no immediate acquisition plans.
There won't be a deal season, Georgens said.
On a call with analysts later, Georgens said that the absence of Data Domain will not make the company's growth vulnerable.
NetApp did not give a forecast for the current quarter, but Georgens said the business was in a period of stabilization.
NetApp, which has more than 130 offices, is the biggest player in the market for mid-range storage equipment, an area that is growing faster than high-end equipment, which EMC and IBM
Shares of NetApp were down 3.5 percent at $22.10 in extended trade after closing at $22.89 on the Nasdaq.
Earlier on Wednesday, BMO Capital Markets upgraded NetApp to outperform from market perform and Canaccord Adams raised its price target on NetApp shares to $25 from $22.50.
(Reporting by Laura Isensee, editing by Leslie Gevirtz, Nichola Groom)