At Netapp, which says good results, says layoffs

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Against the backdrop of growing quarterly results, Netapp also announced that 5.5% of its workforce will be laid off in its 2021 financial year.

Georges Kurian, CEO of Netapp, explains this layoff plan as a strategic alignment

The major IT groups are definitely taking advantage of their announcements of good quarterly results to lay off employees. After Salesforce at the start of the week, it’s up to Netapp to try to put the pill behind a rising turnover. The storage specialist ended the first quarter of its 2021 fiscal year with $1.3 billion in revenue, or 5% better than the previous year. Recurring revenue from cloud services grew nearly 200%, generating $178 million in billings. Only the net profit fell a little but remained robust at $77 million.

So why announce the dismissal of 5.5% of the workforce, or around 600 people out of the group’s 10,800 employees? Officially, Georges Kurian, CEO of Netapp, talks about strategic alignment and the fact that the company must prioritize its resources on the most promising activities. “Namely storage systems and software, while accelerating on public cloud services,” he told The Register.

“Activities other than Ontap are distractions”

Our colleagues indicate that the marketing teams are particularly affected by the layoff plan. This will also be the case for the engineers and developers of SolidFire, a supplier of flash arrays acquired by Netapp in 2015. Mr. Kurian confirmed this latest information and added that he would thus focus “on the higher-margin segments of its SolidFire and HCI offers”. . The layoffs are expected to run throughout the 2021 fiscal year, and generate restructuring costs of $35 to $40 million.

And if the Covid-19 is a main reason for these layoffs, inside sources believe that Netapp is also looking to refocus on the cloud and software-defined technologies. Like Ontap, OS dedicated to storage, on which George Kurian is betting big. “Activities other than Ontap are therefore distractions,” an anonymous source told CRN. “For example, NetApp is offloading much of its data management business to partners like Commvault and Veeam. This suggests that Netapp wants to get out of the world of data management and leave the hand to specialists. This could ultimately improve its margins. »