And MCDT said this tonight... anyone have cc tidbits? Thanks in advance.....
SOURCE: McDATA Corporation
McDATA Exceeds Previous Guidance With Record Revenue For Fourth Quarter and Full Year 2001
Fourth Quarter Revenue of $93.5 Million - Up 19 Percent Over Prior Year; Pro Forma EPS of $.03, Excluding One-Time Charges
BROOMFIELD, Colo., Jan. 24 /PRNewswire/ -- McDATA Corporation (Nasdaq: MCDTA; MCDT), a global leader in open storage networking solutions, reported record revenue results of $93.5 million for its fourth quarter ending December 31, 2001, a 19 percent year-over-year increase. Pro forma net income for the fourth quarter of 2001 was $3.2 million, or earnings per share (EPS) of $.03 on a diluted basis, compared with pro forma fourth quarter 2000 net income of $14.3 million, or $.12 per share on a diluted basis. These revenue and earnings results exceeded the company's previous guidance and Wall Street consensus estimates. The company's fourth-quarter pro forma results exclude non-cash charges related to deferred compensation and amortization, and one-time inventory-related charges, obsolescence of certain demonstration and evaluation equipment inventory and facility lease losses. A reconciliation of reported and pro forma results is included in the attached financial statements.
``We are pleased with McDATA's strong fourth quarter performance, in which we achieved record revenues, diversified our customer channels, improved our pro forma gross margin, and further strengthened our balance sheet,'' said Jack McDonnell, chairman and chief executive officer of McDATA. ``In 2001, McDATA strengthened its position as the high-end storage networking market leader, provided the industry's only full core-to-edge product solutions through the introduction of its 3000 Series switch products, gained market share, extended its leadership in open interoperability, reinforced its commitment to open fabric management through its acquisition of SANavigator, and achieved strong year-over-year revenue growth, despite a difficult market environment.''
``Customers are embracing our comprehensive open networking solutions and rely on McDATA's market-proven, highly available 6000 Series Director-class products for their mission-critical applications,'' added McDonnell.
McDATA generated positive operating cash flow in the fourth quarter and its balance sheet remained strong with no debt and cash and marketable securities totaling $311 million at quarter-end. In addition, the company continued to demonstrate its commitment to maintaining a strong balance sheet by achieving an exceptional total days' sales outstanding (DSO) of 43 days, compared with 63 days reported last quarter.
For the 12 months ending December 31, 2001, revenue totaled a record $344.4 million, a strong 38.5 percent year-over-year increase. Pro forma net income for the full year 2001 totaled $20.7 million, or $.18 per share on a diluted basis, compared with pro forma 2000 net income of $38.1 million, or $.35 per share on a diluted basis.
On a reported basis, the company incurred a net loss of $6.0 million, or $.05 per diluted share, for the fourth quarter of 2001, and a net loss of $8.7 million, or $.08 per diluted share, for full year 2001. These results compare with reported net income of $12.3 million, or $.10 per diluted share, in the fourth quarter of 2000, and $30.8 million, or $.28 per diluted share, for full year 2000.
Fourth Quarter Details
McDATA's revenue from products reached $77.0 million in the fourth quarter, a 9 percent increase over the same period in 2000. Revenue from software and professional services totaled $13.0 million, increasing from $2.8 million in fourth quarter 2000. Other revenue was $3.5 million, down from $4.5 million a year ago. On a channel basis, McDATA's largest customer, EMC, represented 60 percent of total revenue in the fourth quarter of 2001, compared with 68 percent in the prior quarter; IBM accounted for 22 percent, compared with 14 percent in the prior quarter; other OEMs, resellers and systems integrators represented 16 percent, consistent with the prior quarter; and service fees continued to account for the remaining two percent. McDATA also continued to diversify its customer channels by adding Compaq Computer Corporation, the world's largest supplier of SAN solutions, as an OEM partner in the fourth quarter.
Pro forma gross margins were 43.6 percent for the fourth quarter of 2001, compared with 43.2 percent in the third quarter of 2001, and 51.9 percent in the fourth quarter of 2000. McDATA's sequential gross margin improvements were primarily driven by the recognition of previously deferred software revenue, manufacturing efficiencies, and channel mix improvements, offset in large part by continued use of high-cost component inventory and certain non-recurring expenses. While the majority of the high component costs were absorbed in the fourth quarter, first and second quarter gross margins will continue to reflect some high-cost components. However, the company expects overall gross margin improvements in each quarter of 2002.
In the fourth quarter, the company incurred one-time non-cash charges of $11.3 million pre-tax, including an inventory-related charge of $6.3 million, a $4.1 million charge related to obsolescence of certain demonstration and evaluation equipment inventory, and a charge related to facility lease losses of approximately $940,000. The inventory-related charges primarily resulted from a year-end complete physical inventory analysis, including excess and obsolete inventory and a reconciliation of inventory at the company's contract manufacturer and other suppliers' sites.
Key 2001 Accomplishments
In 2001, McDATA strengthened its market leadership in the core Director space, leveraged its technology leadership into a full core-to-edge product offering, provided unrivaled storage network management software solutions, and expanded its multi-channel distribution. Highlights include:
-- McDATA became a completely independent company in February of 2001,
when EMC distributed its remaining shares through a spin-off to its
shareholders. This spin-off followed McDATA's initial public offering
(IPO) in August of 2000.
-- McDATA was added to Standard & Poor's MidCap 400 Index in November
2001.
-- In addition to its OEM and reseller partnerships with EMC, IBM and
Hitachi Data Systems, McDATA expanded its multi-channel distribution by
adding Hewlett-Packard and Compaq Computer Corporation as OEM partners.
-- McDATA introduced its 6000 Series Director in April of 2001, which
leads the market in availability, scalability and redundancy. McDATA's
6000 Series Directors are the only Director-class products that are
upgradeable to 2 Gbps and 10 Gbps, are multi-protocol ready and
interoperable with approximately 90 percent of the current installed
base of fabric switches, providing customers with significant
investment protection.
-- McDATA became the only true provider of a core-to-edge family of
products in 2001, when it launched its 32-port 3000 Series Fabric
Switch, rounding out its full line of 9-, 16- and 64-port Switch and
Director-class products.
-- McDATA and IBM announced the availability of FICON Management Server in
November 2001; a comprehensive and easy-to-use software product that
allows automated control of both FICON and ESCON storage networks from
a single interface.
-- McDATA more than doubled its sales and support organization in 2001,
growing from 100 to 203 professionals.
-- McDATA continued its global expansion in Asia Pacific, Europe and North
America, opening offices in Seoul, Zurich, Paris and Toronto.
-- McDATA signed a new manufacturing and purchase agreement in December
2001 with its contract manufacturer, SCI Systems, Inc, further
strengthening the companies' strategic relationship.
-- McDATA acquired the award-winning SANavigator software in September
2001, taking a leading position in offering open storage network
management software that provides visibility and discovery in a
multi-vendor fabric environment. The addition of SANavigator enriches
McDATA's robust Enterprise Solutions Architecture (ESA) platform, which
also includes the company's Enterprise Operating System (E/OS) firmware
and its Enterprise Fabric Connectivity Manager (EFCM).
``Customers increasingly require cost-effective solutions that support mission-critical applications, are simple to deploy and manage, and support heterogeneous environments through open, interoperable platforms,'' said John Kelley, McDATA's president and chief operating officer. ``McDATA's comprehensive core-to-edge solutions not only meet customers' needs today, but more importantly they provide customers a proven, investment-protected platform on which to scale and manage their storage networking fabrics going forward. In addition, our best-in-class SANavigator software allows customers to simplify and optimize the management of heterogeneous SAN fabrics, with a single view core-to-edge.''
``One of our key strengths is our architecture. From our serial crossbar to our VIPER ASIC - McDATA's architecture is common across our core-to-edge Director and Switch products, and was designed from day one to support a host of advanced features,'' said McDonnell. ``For years, customers have trusted McDATA's core Director products, which have a proven track record of unmatched availability and reliability. Our architecture platform ensures that we will continue to meet their evolving and growing storage networking needs.''
Outlook
McDATA anticipates revenues in a range of $85 to $95 million for the first quarter ending March 31, 2002, representing year-over-year growth of approximately 2 to 14 percent for the quarter, and reflecting normally slower first quarter seasonality as well as some continued recessionary pressures. Pro forma fully diluted EPS is expected to be in the range of breakeven to $.02 in the first quarter. The first quarter pro forma EPS estimate excludes non-cash deferred compensation charges and amortization charges related to intangible SANavigator assets. McDATA reiterates its previous full year revenue guidance of 11 to 22 percent year-over-year growth, which includes a projection of $10 million of SANavigator revenue. The company expects pro forma EPS to be in the range of $.13 to $.20, inclusive of $.04 to $.06 SANavigator dilution. Further guidance on assumptions will be provided on the company's conference call today.
McDATA will hold a conference call to discuss fourth quarter 2001 results today, January 24, 2002, at 3:00 p.m. MT. The conference call will be simultaneously Web cast on the company's Web site -- and will be archived for future review. The Web cast presentation will include slides containing additional detailed information of interest to investors.
About McDATA ( www.mcdata.com )
Sounds ok on the surface?
Dumb Q. Its nice they are making money, but how come they don't make more? Directors and SAN sofware. This should be high margin stuff and I thought would be very profitable as opposed to the HBA/low end switches, but not yet? Any help out there? |
