Brocade Communications Swings To Q1 Profit - Update

(RTTNews) - Brocade Communications Systems Inc. (BRCD) Thursday posted a profit for the first quarter, turning around from a loss last year, due mainly to lower costs and the absence of a hefty tax charge recorded last year. Both earnings and revenues for the quarter came in ahead of analysts' estimates.

San Jose, California-based Brocade reported first-quarter net income of $80.9 million or $0.18 per share, compared to a loss of $21.3 million or $0.05 per share last year.

Last year's results included a non-cash tax charge of $78.2 million or $0.17 per share, due to a tax change in California which also reduced deferred tax assets.

Excluding unusual items, adjusted earnings for the quarter improved to $108.8 million or $0.24 per share from $98.7 million or $0.21 per share a year ago. On average, 24 analysts polled by Thomson Reuters estimated earnings of $0.20 per share for the quarter. Analysts' estimates typically exclude special items.

Brocade, which makes computer switches for data-storage networks, said its total revenues for the quarter dropped 4 percent to $564.5 million from $588.7 million a year ago. Twenty-one analysts had a consensus revenue estimate of $550.45 million for the quarter.

Chief Executive Lloyd Carney said, "Our performance was driven by the strength of our Storage Area Networking (SAN) business as customers continue to adopt Gen 5 Fibre Channel networks for their highly virtualized data centers and high-performance storage environments, including Solid State Disks (SSDs). While the overall IP Networking business declined year-over-year, we achieved our outlook for the quarter."

Storage Area Networking business revenue dropped 1 percent to $412 million, while IP Networking business revenue declined 11 percent to $153 million from a year ago, due to lower sales into the U.S. Federal government as well as lower non-Federal sales in the Americas region.

Gross margin, or gross profit as a percent of sales, advanced to 66 percent from 63.5 percent last year. Operating margin rose to 21.5 percent from 15.8 percent.

BRCD closed Thursday's trading at $9.43, up $0.13 or 1.40%, on the Nasdaq. The stock further gained $0.08 or 0.85%, in the after hours-trade.