Data management solution provider NetApp (NTAP) is retreating after its data storage supplier Xyratex (XRTX) reported last night that its revenue from NetApp fell by about 30% last quarter, compared with the previous quarter, Wells Fargo reported in a note to investors earlier today. NetApp is Xyratex's largest customer, and the 30% revenue decline is steeper than a 26.5% revenue decline reported by NetApp in its last earnings report, the firm noted. Moreover, Xyratex, which reported weaker than expected third quarter results last night, said that the macro pressures it experienced in July and August have continued, according to the firm. Although Wells believes that Xyratex's problems could be company specific, it recommends exercising caution on the sector and maintained a Market Perform rating on NetApp. In late morning trading, NetApp dropped 86c, or 2.65%, to $31.59.
Happy demi-anniversary, stock market rally. Will the honeymoon ever end?