5/15 BRCD ($42 run $55)in line with lowered ests , Leaves Earlier Guidance Unchanged
By Thomas Lepri
Senior Writer
5/15/01 5:38 PM ET
(Updated from 4:23 p.m. ET)
Brocade (BRCD:Nasdaq - news) said it earned 5 cents a share in the second quarter ended April 28, in line with analysts' reduced expectations.
Revenue jumped 86% to $115.2 million from $62.1 million a year earlier.
Analysts' estimates for the fiscal second quarter have come down considerably in the past month. The storage-infrastructure company warned in late April that earnings would come in at 5 cents to 6 cents a share and that revenue would fall 30% from the fiscal first quarter. Prior to the warning, analysts had expected the company to earn 11 cents a share.
Brocade makes fiber-channel switches that connect storage-area networks, one of the fastest growing areas of the enterprise hardware business. The stock gained more than 1,000% between its 1999 initial public offering before starting a precipitous decline, along with every other storage infrastructure stock, in September 2000. Brocade now sits around 65% off its 52-week high, despite its participation in the broader tech rally in April.
The outlook the company gave on the conference call following its earnings release was tough to gauge. On one hand, newly anointed Chief Financial Officer Tony Canova gave a cautiously optimistic assessment of the current spending environment. "We're just two weeks into our third quarter, and information about business momentum is still anecdotal," he said. "But we feel that the economic backdrop is much better than it was in February."
Yet the backdrop doesn't look good enough to justify raising guidance from the level Brocade set at its April warning: Canova reiterated Brocade's target of sales growth of 58% for 2001, with earnings growth resuming this fall. Canova also said that gross margins, which came in at 60% in the second quarter, will remain in the 60%-range for the next several quarters, as the company previously said they would. |
