IT Spending Off to a Slower Start; McDATA Revises First-Quarter Revenue and EPS Guidance; McDATA's Pipeline Remains Strong
BROOMFIELD, Colo., March 5 /PRNewswire-FirstCall/ -- McDATA® Corporation (Nasdaq: MCDTA/MCDT), the worldwide leader in open storage networking solutions, today revised its first-quarter revenue and earnings per share (EPS) guidance, citing the continuing cautious approach to IT storage and related infrastructure investment spending in the early months of 2002. McDATA currently expects revenue to be in the range of $73 to $78 million in the first quarter, compared to previous guidance of $85 to $95 million. As a result, the company now expects pro forma EPS for the first quarter to be in a range of a loss of $(0.02) to $(0.04), excluding non-cash deferred compensation and amortization charges, compared to its previous guidance of breakeven to $0.02.
``McDATA's fourth-quarter revenue performance was very strong and reached record levels, which we now believe in part reflected some additional spending to utilize existing 2001 budget authorizations,'' said Jack McDonnell, chairman and chief executive officer of McDATA. ``We have been cautiously optimistic about IT spending in 2002, recognizing that the timing of a resurgence in enterprise storage and infrastructure spending would likely be closely tied to a recovery in the economy and a favorable outlook for corporate profits. Thus far in 2002, it appears that this spending is off to a slow start, with larger customers, in particular, taking longer to make major investment decisions. However, our pipeline remains strong and is consistent with our expectations at this point in the year.''
The lower revenue guidance is the primary driver of the change in EPS guidance. ``McDATA continues to improve its manufacturing performance, however, the lower revenue has a direct impact on gross margins, which we now expect to be in a range of 42 to 44 percent in the first quarter,'' said John Kelley, president and chief operating officer. ``We still expect gross margins to improve as the economy and revenues improve during 2002. As mentioned in our press release earlier today, McDATA has a strong vision that will be discussed with the investment community at our Analyst Day on March 8, 2002. We are also on track to deliver our new 2Gb products for general availability in our second quarter. As companies become more confident in the economic recovery, we expect that spending for IT storage and infrastructure will accelerate and McDATA is ready to meet that demand as the first and still the only true provider of Core-to-Edge products and comprehensive open storage networking solutions.''
McDATA will report its first quarter 2002 results on April 17th. The company will hold a conference call and open web cast today at 5 p.m. ET to discuss the revised guidance. The web cast will be available on McDATA's web site at www.mcdata.com .
About McDATA ( www.mcdata.com )
McDATA (Nasdaq: MCDTA/MCDT) is the worldwide leader in open storage networking solutions and provides highly available, scalable and centrally managed storage area networks (SANs) that address enterprise-wide storage problems. McDATA's core-to-edge enterprise SAN solutions improve the reliability and availability of data to simplify SAN management and reduce the total cost of ownership. McDATA extensively pre-tests its solutions to provide IT organizations with the comprehensive tools, methodologies and support essential to robust SAN implementation. McDATA distributes its products through its OEMs, network of resellers and Elite Solution Partners. McDATA and the McDATA logo are registered trademarks of McDATA Corporation.
Forward-Looking Statements
This press release contains statements about expected future events that are forward-looking and subject to risks and uncertainties. Readers are urged to consider statements that include the terms ``believes'', ``belief'', ``expects'', ``plans'', ``objectives'', ``estimates'', ``anticipates'', ``intends'', ``targets'', or the like to be uncertain and forward-looking. Factors that could cause actual results to differ and vary materially from expectations include, but are not limited to, our ability to quickly integrate SANavigator and ramp sales, our relationship with EMC Corporation and IBM and the level of their orders, the impact of the general economic slowdown and the recent terrorist attacks on purchasing decisions by customers and capital spending, our ability to complete the manufacturing review plan and the successful implementation of an ``outsourcing-focused'' manufacturing model, our ability to expand sales into higher margin channels through system integrators and distributors, a loss of any of our key customers (or our OEMs' key customers), distributors, resellers or our contract manufacturer, our ability to expand our product offerings and any transition to new products (such as 2Gb products), component quality and availability, the impact and uncertainty of typically having most of the sales volume occur in the last month and a significant amount in the last two weeks of the fiscal quarter, the development of the storage area network and switch markets, competition in the storage area network and switch markets, one-time events and other important risk factors disclosed previously and from time to time in our filings at the U.S. Securities and Exchange Commission. These cautionary statements by us should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by us. We cannot always predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. All cautionary statements should be read as being applicable to all forward-looking statements wherever they appear. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE: McDATA Corporation |
