Brocade Communications Increases Share Buyback Program To $1 Bln

(RTTNews) - Brocade Communications Systems, Inc. (BRCD) said Wednesday that its board of directors has increased the company's share repurchase authorization to $1 billion from $308 million, under an expanded capital allocation strategy. The network equipment maker noted that the expanded capital allocation strategy reflects its confidence in its long-term prospects and increasing cash flow.

The company noted that the timing and amount of repurchase transactions under the program will depend on market conditions, corporate business and financial considerations, and regulatory limitations. Brocade has a market capitalization of $3.69 billion.

Lloyd Carney, CEO of Brocade Communications said, "As Brocade focuses our investments in strategic areas of our business and as we achieve greater operational efficiency, we expect improved profitability and higher levels of free cash flow as a result. Brocade remains committed to driving shareholder value and I am confident that the Board's increased authorization to the repurchase program will help meet that goal."

Brocade, which makes computer switches for data-storage networks, said it has repurchased $581 million of its common stock since the beginning of the third quarter of fiscal 2011. This has reduced the average diluted shares outstanding by nearly 10 percent, the company noted.

Brocade will host its annual Analyst and Technology Day later today at its corporate headquarters in San Jose, California. The event will include updates on the strategic direction for the company, IT industry trends, product positioning and a financial review.

In mid-August, Brocade reported a profit for the third quarter that almost tripled from the prior year on higher margins and settlement gains, offsetting a drop in sales amid weakness in the storage market.

The company's net earnings for the third quarter were $119 million or $0.26 per share, up from $43 million or $0.09 per share in the year-ago period. Sales for the quarter declined 3 percent to $537 million from $555 million in the prior-year quarter.

In Wednesday's regular trading session, BRCD is trading at $8.41, up $0.23 or 2.81 percent on a volume of 975,047 shares.