NetApp expanding, adding jobs

Sales growth may slow

Network Appliance, which provides data storage, has reduced its revenue forecast, citing a drop in information-technology spending by banks and a U.S. economy teetering on recession.

Despite the downturn, NetApp will press ahead on expansion worldwide this year. It expects to add at least 200 workers at its campus in Research Triangle Park, taking the local total to about 1,000.

And the California company's five-year plan includes as man as four new office buildings adjacent to its RTP facilities. That would create capacity to increase the local work force to about 4,500, making it one of the biggest tenants in RTP.

"We're really watching what's happening in the market, and so far the signs are positive," said Joanna Karwowska, a NetApp vice president in RTP. "We cannot predict what can happen tomorrow, in terms of people talking about a recession. But we're conservatively run and do not try to overextend ourselves."

Even during times of decline, investment in computing systems that store and manage increasingly copious data is hard to avoid. Morgan Keegan analyst Brian Freed said he expects NetApp's 30 percent growth rate to slow to about 20 percent this year because of the weaker economic picture. But that's still strong, said Keegan, who rates NetApp stock a "buy."

The company, based in Sunnyvale, Calif., will open its fourth RTP building -- now under construction -- in January. It bought three RTP buildings from Cisco Systems in 2004.

That purchase illustrates that promises of big growth by tech companies are often tenuous, at best, because of changes in sales trends and world labor markets.

Cisco had previously made bold forecasts for growth in the Triangle that included thousands of new jobs. Cisco continues to expand in RTP but largely scrapped its bigger plans after the dot-com bust in 2001.

NetApp executives concede that the current worldwide financial shake-up and uncertainty around the U.S. economy could put off or even derail projections.

The company in February lowered its earnings forecast after a particularly strong fiscal third quarter, which ended in January. NetApp CEO Dan Warmenhoven at the time told investors that current-quarter revenue growth might suffer as banks cut spending on new information technology.

Like many software and IT-infrastructure providers, NetApp gets the biggest chunk of its revenue from financial companies that need to store, get access to and manage tremendous amounts of data.

However, as banks suffer billions in losses from bad loans, they may cut new investment, Warmenhoven said last month.

He projected that fourth-quarter revenue will increase 14 percent to 18 percent from a year ago, lower than the 20 percent rise analysts had expected.

Warmenhoven pointed to smaller customer budgets and said the company will try to mitigate exposure to the financial sector by expanding into new software and service areas.

Area's good for NetApp

And the Triangle is key to Net-App's long-range plans. Financial assistance from state government, the region's concentration of tech workers and the area's relatively low living costs are all attractive to company officials.

NetApp has exceeded almost every projection for its local growth. It arrived in the Triangle in 1999.

In 2004, the state promised Net-App $8.9 million if it created 361 jobs over five years. State officials came back with a second round of incentives in 2007 worth as much as $15 million over 10 years, based on infrastructure development and creating and keeping 646 additional jobs.

"They scored a lot of sweet deals," Morgan Keegan's Freed said. "At 20 percent growth, it won't take them long to double."

If business remains as healthy as many analysts predict, NetApp will construct four additional office buildings on adjacent land in RTP that it bought in July for $12.5 million. The 100-acre site covers the southwest corner of Kit Creek Road and Louis Stephens Drive, on RTP's Wake County side.

Each new building would cover 200,000 square feet. The total would more than double the company's local work space. The combined campus would make RTP one of the company's biggest sites in the world, said Mark Skiff, senior director for NetApp in RTP. The company has about 3,000 workers at its California headquarters and 6,600 worldwide.

The RTP site is the company's only global customer support center and employs professionals who speak multiple languages. The location also provides software development and hardware testing for customers.

Freed said tighter regulatory requirements will buoy growth, leading many financial companies to continue spending on data storage. And that should support Net-App's bold expansion plans for RTP, Europe and India, he said.