Brocade posts 3rd-quarter profit, reversing loss, but revenue gain, outlook disappoints

Wednesday, August 18, 2010

Brocade posts 3Q profit, revenue gain falls short

SAN JOSE, Calif. — Network computing gear maker Brocade Communications Systems Inc. said Wednesday that it posted third-quarter net income of $22 million, reversing a loss as revenue grew.

But its revenue gains fell short of analyst forecasts and the company lowered its revenue expectations for the full year. Brocade’s outlook for fourth-quarter profit also was less than analysts expected. Shares fell 7 percent in after-hours trading Wednesday.

Net income for the three months to July 31 came to 5 cents per share, reversing a loss of 6 cents per share, or $23.5 million, in the same period a year ago.

Revenue rose 2 percent to $503.5 million from $493.3 million.

That was short of the $508.4 million expected by analysts polled by Thomson Reuters.

Adjusted earnings per share of 13 cents was met analysts’ forecast.

The company said it now expects revenue for the full year between $2.07 billion and $2.09 billion, less than its June view of between $2.1 billion and $2.2 billion.

It also expects fourth-quarter adjusted earnings per share between 12 cents and 14 cents, below the 15 cents per share expected by analysts. It also expects full-year adjusted net income of 57 cents per share to 59 cents per share. Analysts expect net income of 59 cents, according to Thomson.

Shares fell 37 cents, or 7.2 percent, to $4.77 in after-hours trading Wednesday after gaining 17 cents, or 3.4 percent, to close at $5.14 during the regular session.

CEO Michael Klayko said in a statement the company had better-than expected results in its storage area networking business and expects a “strong finish” through the end of fiscal 2010.

But the company also said in presentation materials the company continues to “see challenges in the macro economy, which could negatively impact estimates for (information technology) spending.”

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