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To: SusieQ1065 who wrote (746)	8/15/2001 7:12:59 PM
From: 2MAR$	Respond to of 762

BEAS ( $16.80) hits new year low after cutting outlook NEW YORK, Aug 15 (Reuters) - Shares of BEA Systems Inc. (NasdaqNM:BEAS - news) on Wednesday tumbled more than 4 percent after the company became one of the last software makers to lower its outlook for the year. In mid-afternoon trading, the share price of BEA fell 84 cents, or 4.57 percent, to $17.75. The shares recovered from an early bottom of $17.40, the lowest price since November 1999 and a new 52-week low. After the close of the market Tuesday, BEA said that second-quarter earnings, excluding one-time items, was a penny above the 9 cents a share expected by analysts, on the average, according to Thomson Financial/First Call. However, to make that number, the San Jose, California-based company was forced to pull from its backlogged revenue. Subsequently, the company also revised its guidance for the remainder of the year downward, owing to the slowdown in technology spending. ``While we recognize the company performed well in a tough environment, relative to other software companies, we believe the stock is fully valued at these levels,'' influential analyst Charles Phillips of Morgan Stanley wrote in a research report. He added that he maintained a neutral rating on the stock. Like Phillips, most analysts lowered their outlook for the remainder of the year and set targets for fiscal year 2003 in accordance with the company's own guidance. Pacific Growth analyst Mark Mulcahy, however, lowered his rating on BEA to a ``long-term buy'' from a buy and Prudential Securities analyst John McPeake cut his price target for the second time this month, saying they believed the stock is too high priced. McPeake cut his 12-month price target on the stock Wednesday night to $23 from $25 a share. McPeake first lowered his price target on BEA to $25 a share from $41 last week. BEA is the leader in applications servers, software that forms a foundation on which developers build their applications. While analysts noted that tough economic times may drive out smaller competitors, IBM, No. 2 in the area, still is ``a thorn in BEA's side.'' Still, according to a recently released study by Giga Information Group BEA's WebLogic, applications server revenue has been growing by 75 to 80 percent this year, while Giga estimates IBM's WebSphere is growing at 50 percent. Meanwhile, the market as a whole is growing by 60 percent, far from the 200 percent it grew in 2000. Additionally, Giga analyst Mike Gilpin said a recovery in infrastructure software spending is unlikely to appear until the first quarter of 2002. ``Indeed, even a first quarter of 2002 recovery is by no means a high probability,'' he wrote in the report.

To: SusieQ1065 who wrote (746)	8/15/2001 7:20:15 PM
From: 2MAR$	Respond to of 762

BRCD ( $30-$32-$30) PE 89--> Q3 profit, sales meet estimate, projects flat revs (Adds details, adds byline, previous SAN JOSE) By Peter Henderson SAN FRANCISCO, Aug 15 (Reuters) - Computer storage network company Brocade Communications Systems Inc. <BRCD.O> reported on Wednesday that third-quarter profit dropped 40 percent as the economy sapped market strength, but Brocade met Wall Street expectations with results and its outlook. Brocade's net earnings fell to $12.05 million, or 5 cents per diluted share, in the fiscal third quarter ended July 28 from $20.08 million, or 8 cents per share, in the quarter a year ago. Sales at Brocade, which makes switches that tie together storage networks, rose to $116.3 million from $92.1 million a year ago. Analysts polled by Thomson Financial/First Call expected EPS of 3 cents to 6 cents, with a consensus forecast of 5 cents, on sales of $116 million. The gross profit margin of sales minus the cost of sales as a percentage of revenues, was 60 percent, up from 58.6 percent a year ago and in line with the fiscal second quarter and the company's third-quarter projections. Earnings were steady from the previous quarter and sales ticked up by $1 million. "Up sequentially slightly is impressive in this environment," Doug MacKay, a portfolio manager at Oak Associates, commented by e-mail. Brocade shares swung after hours, dropping to about $30.07 after rising to $31.91 from a close of $30.34 on Nasdaq. They had lost $1.82 before the earnings news. Brocade's switches tie together storage networks, which many companies are turning to in order to manage data that is burgeoning as the firms move business on line. Brocade shares have plummeted 67 percent this year as hope has faded for a technology expansion. However, the stock has outperformed storage heavyweight EMC Corp. <EMC.N> by about 37 percent this year. WAITING ON THE ECONOMY "Our ability to do what we said we were doing to do is a critical part of our being a quality company,", Chairman and Chief Executive Greg Reyes said in an interview after announcing the results. He said some technology customers might use up left over dollars by the end of the year but that there was not likely to be a spending blitz. He declined to call the economy: "I am a trained business man. I am not a trained economist." Chief Financial Officer Tony Canova forecast sales of $120 million in the fourth quarter and earnings of 5 cents per share, broadly in line with Wall Street expectations. "People were concerned with what might happen to guidance. There have been a lot of companies in storage that have had to bring numbers down, some by quite a lot. Brocade bucked that trend," said Wit SoundView analyst Glen Ingalls. Canova said that a new product cycle, including the SilkWorm 12000 switch with which Brocade expects to tap higher end markets, would would show a revenue impact in the second half of the fiscal year, when revenue could accelerate. First quarter sales would rise in the high single digits and first half growth would be modest, he said. Bill Shope, an analyst at ABN AMRO, said Brocade's SilkWorm 12000 appeared to be ramping up well, although "The real competitive environment doesn't start to show until the economy shapes up," he said. Canova said he was optimistic about the market opportunity. "We are mindful of the broader macroeconomic conditions which may continue to affect our revenue growth," he added. ((Peter Henderson, San Francisco Bureau 415 677-2578 peter.henderson@reuters.com)) REUTERS * end of story *