CA: NetApp Headquarters
Photograph by Kris Tripplaar — Sipa USA/AP

NetApp Plans Yet Another Round of Layoffs

Nov 03, 2016

Data storage giant NetApp is laying off more workers.

The company said in regulatory filing on Thursday that it would lay off 6% of its workforce, or about 640 employees based on its total headcount of 10,700 workers.

NetApp said that the layoffs were part of an effort to streamline its core business and cut expenses. The company will take a charge of about $50 million to $60 million for the layoffs and the related costs, the filing said.

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The layoffs, which will take place through the end of next year, come on top of a another round of 1,500 job cuts announced in February. Those layoffs—in addition to yet another layoff plan last year— have been substantially completed as of July, according to a September regulatory filing,

Like many big enterprise hardware companies like Hewlett-Packard Enterprise (hpe) and Cisco (csco) that have recently laid off staff, the rise of cloud computing has hurt NetApp’s core business of selling data center storage hardware. Instead of buying hardware, businesses are paying for computing resources on demand from technology giants like Amazon (amzn) and Microsoft (msft).

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In its latest earnings released in August, NetApp reported $1.29 billion in sales, a roughly 3% drop from the $1.34 billion during the same time period last year. Likewise, NetApp's lost $64 million in net profit for its first quarter compared to the $30 million it lost the previous year during the same time period.

In December, NetApp bought a competing storage hardware company SolidFire for $870 million, partly to gain SolidFire’s so-called flash storage technology. Instead of traditional spinning disc storage arrays, flash storage is faster and used by companies for cutting-edge data crunching tasks.

In its August call with analysts, NetApp CEO George Kurian said that companies can use its flash storage to replicate what companies like Amazon, Google (goog), and Facebook (fb) use in their data centers. He said that its flash storage products “will be the majority of the business going forward,” referring to NetApp.

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In a statement about latest layoffs, NetApp said that it is starting to see progress with higher growth product sectors like flash arrays and so-called hybrid cloud solutions, in which companies use a combination cloud computing resources and their own internal data centers that have been outfitted with advanced data-center management software, according to The Wichita Eagle.

NetApp said it hopes to “return to moderated growth” by May 2017, according to the report.

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