MCDT ( squeezed prior on EMC's guidance $30)
Revenue Up 76 Percent, Pro Forma Net Income Up 48 Percent Over First Quarter 2000
BROOMFIELD, Colo., April 19 /PRNewswire/ -- McDATA Corporation (Nasdaq: MCDT - news, MCDTA - news), a global leader in open storage network solutions, reported record revenue for its first quarter ending March 31, 2001, driven by strong sales of its market-leading, high-end enterprise director product, as well as solid demand for recently introduced new products that provide storage area network (``SAN'') solutions for the entire enterprise.
Revenue for the first quarter of 2001 totaled $83.0 million -- a 76 percent increase over first quarter 2000 and a six percent sequential increase over fourth quarter 2000. Specifically, revenue from products reached $74.9 million, an 83 percent increase over the same period in 2000, and a six percent sequential increase over the previous quarter. Revenue from software and professional services totaled $3.7 million, increasing 79 percent over first quarter 2000 and 29 percent sequentially. Other revenue was $4.4 million, up nine percent from a year-ago, and slightly lower than in the fourth quarter 2000 due to an expected decline in service fees. On a channel basis, McDATA's largest customer, EMC, represented 68 percent of total revenue in the first quarter of 2001, IBM accounted for 14 percent and other OEMs, resellers and systems integrators represented 14 percent, with service fees accounting for the remaining four percent.
Pro forma net income for the first quarter 2001, excluding non-cash charges related to stock options, increased 48 percent to $9.5 million, compared to pro forma first quarter 2000 net income of $6.4 million. On a diluted basis, pro forma earnings per share were $0.08 in first quarter 2001, up 33 percent from $0.06 in the first quarter of 2000.
``We met the most recent consensus estimates and reached record revenues in the first quarter,'' said Jack McDonnell, CEO and president of McDATA. ``However, the economic slowdown may affect market growth and has affected near-term visibility, which has caused us to be more cautious about our outlook for the second quarter and the full year. As a result, we are revising our forward-looking year-over-year revenue guidance to a range of 40 to 45 percent growth for the second quarter, and a range of 50 to 60 percent growth for the fiscal year 2001. Contributing to this growth are McDATA's major new product introductions in the storage area network market, including our fifth generation Director, the 64-port ED-6064, as well as our new 32-port Fabric Switch, the ES-3032, which together provide us with the most complete SAN hardware product suite in our market.''
Pro forma gross margins were 45.7 percent for the first quarter of 2001, compared to 53.0 percent in the first quarter of 2000. This decrease is primarily due to increased manufacturing costs related to the transition to McDATA's new generation SAN products -- the ED-6064 Director and its new switch products.
Reported net income increased 56 percent to $7.5 million for the first quarter of 2001, compared to $4.8 million in the prior year. Overall, McDATA's balance sheet remained solid with cash and investment securities totaling $364 million at quarter-end, compared to $388 million at the end of fiscal year 2000.
As is true for many companies, the economic slowdown has affected McDATA's near-term visibility and, therefore, the company's ability to provide forward-looking guidance on likely results. As already noted, McDATA has revised its guidance to anticipate revenue growth of 40 percent to 45 percent, year-over-year, in the second quarter and 50 percent to 60 percent for the full year, both of which are dependent on factors such as continued market growth and other industry trends. McDATA also believes it would be helpful in this environment to provide investors with a best-guess range of EPS guidance, which the company plans to update as visibility improves in subsequent quarters of this year. On that basis, current guidance is for pro forma fully diluted EPS to be in a range of $.04 to $.06 in the second quarter, and flat within a range of slightly lower-to-slightly higher EPS for the full year 2001 in comparison to 2000 results. Further guidance on assumptions will be provided on the company's conference call today.
``I believe that McDATA is as well-positioned as ever to capitalize on the long-term anticipated growth in our industry with our enterprise-to-edge strategy,'' said McDonnell. ``Our products remain mission-critical to the companies that use them -- the solutions we offer are not a matter of 'if,' but 'when.' We will continue to increase market penetration with our family of products, develop additional customer-focused solutions and expand our distribution channel to meet our customers' needs in the future.''
McDATA recently announced the release of the next generation Director product, the ED-6064, which is the only single-stage 64-port Director and the foundation of the company's enterprise-to-edge SAN platform. As the only storage area network vendor to provide a complete family of enterprise-to-edge product solutions, McDATA continues to lead the market at the enterprise level and compete in every segment in the switch market. McDATA's open storage networking solutions provide customers with the capability to scale up or down in size and to solve their storage needs.
Other highlights from the first quarter of 2001 include:
An OEM agreement with Hewlett-Packard to sell and distribute McDATA's new Director (under the SureStore brand name) and fabric switch products worldwide through both direct and indirect channels.
Introduction of the ES-3032, McDATA's new 32-port fabric switch, built on the same basic architecture as the Director and incorporating several of the same redundancy features.
Expansion of the company's worldwide reseller agreement with IBM to include McDATA's entire enterprise-to-edge family of products.
Formation of a strategic partnership with DataLink as a Systems Integrator.
A partnership agreement with Avnet Hall-Mark, expanding the opportunity to provide higher value SANs to middle market end-users. McDATA also announced a multi-partner agreement with industry leaders VERITAS Software and StorageTek to bring the market reliable LAN-free backup solutions, also to be offered through Avnet Hall-Mark.
A worldwide reseller agreement with Computer Network Technology (CNT) for McDATA's enterprise-to-edge line of Fibre Channel connectivity products.
A new solution developed with Nortel Networks, enabling customers to seamlessly interconnect storage area networks (SANs) over metropolitan area network (MAN) infrastructures.
Partnerships with 14 new members to McDATA's OpenReady(TM) program for comprehensive storage area network interoperability, including ATL, BMC Software, Breece Hill Technologies, Connex, CNT, Crossroads Systems Inc., Data Core Software, Legato Systems Inc., OTG Software, QLogic, SCH Technologies, StorageTek, Tivoli Systems and TROIKA Networks.
McDATA will be holding a conference call to discuss first quarter 2001 results today, April 19, 2001, at 3:30 p.m. MDT. The conference call will be simultaneously Web cast on the company's Web site -- www.mcdata.com -- and will be archived for future review. The Web cast presentation will include slides containing additional detailed information of interest to investors. |
