Editor’s note: Greg Richardson is an analyst with

HAMPTON, N. H. – (Nasdaq: NTAP) results indicate that the company has successfully escaped the grip of the Great Recession, as GAAP revenue increased 35.5% from the year-ago quarter.

(NetApp, which has a major campus and data center in Research Triangle Park, N.C., beat Wall Street expectations. )

With revenue of just over $1.0 billion, NetApp has cleared its second major hurdle in as many quarters. Through the recession, NetApp management stated that the company was taking action to position itself to meet two goals: earn $1 billion of quarterly revenue and achieve 16% non-GAAP operating margin.

As an early sign that the company was poised to accelerate out of the recession, NetApp leaped past its 16% margin goal in 3Q09, posting a non-GAAP operating margin of 17%. Building upon the momentum, NetApp exceeded its revenue goal in 4Q09, while maintaining a non-GAAP operating margin of more than 16%.

TBR attributes NetApp’s record revenue to double-digit growth in Americas revenue, as well as strong demand for unified storage [virtualization], which accounted for a record 42% of product revenue in 4Q09.

Storage Business Booms

NetApp’s storage product growth leaves its competitors in the dust.

During the recession, NetApp continually leaned upon strong demand for its V-Series controller to drive unit shipment growth, despite declining revenue. Through double-digit V-series unit increases, NetApp laid the foundation for post-recession revenue expansion by positioning itself for up-selling and cross-selling opportunities. As enterprise budgets have begun to loosen, NetApp is reaping the reward of an expanding footprint by driving stronger storage product revenue growth than the majority of its peers.

In 4Q09, NetApp posted a 37.1% year-to-year increase in product revenue, outpacing EMC and HP, which declined by 6.7% and 3.0%, respectively, as well as IBM, which posted a 1.4% increase in storage revenue from 4Q09.

Channels Deliver

Channel partners are planting seeds with new accounts.

NetApp’s small scale forces the company to rely on partners to help keep stride with larger competitors that are able to inorganically expand their portfolios and distribution capabilities. NetApp relies on the channel for the majority of its revenue, as indirect revenue accounted for 70% of total revenue in 4Q09. This allows NetApp’s direct sales force to focus on continued expansion in the Storage 5000, its targeted pool of the 5,000 largest storage users, by volume.

As a result of record contributions from Arrow, Avnet, and IBM, NetApp’s three largest channel partners, NetApp posted 48.0% year-to-year growth in low-end systems through the channel.

Next Challenge: More Technology, Products

Technology partners hold the keys to new product development.

NetApp continues to expand its roster of technology partners, in order to be in better position to meet demand for virtualization and cloud computing. As larger competitors, such as EMC and IBM, are able to leverage their large cash balances to make tuck-in acquisitions to enhance their portfolios, NetApp must team with partners to continue broadening its solution set.

In 4Q09, NetApp extended its relationship with Cisco and VMware, co-developing secure, multi-tenancy architecture that enables customers to share multiple applications in physical and virtual environments. NetApp also expanded its partnership with Microsoft in 4Q09, teaming to deliver storage and management capabilities for virtual environments and private clouds.

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