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Brocade Communications Beats Q3 Estimates

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The data storage and communication networking solutions provider, Brocade Communications Systems Inc. (NASDAQ: BRCD) said late on Tuesday that fiscal third quarter results surpassed the company’s own expectation as cost cutting efforts and unexpectedly better demand in the storage market boosted the bottom line.

Shares skyrocketed about 16% in afterhours trading.

For the fiscal third quarter ended July 27, the San Jose CA based company posted a profit of $118.7 million or 26 cents a share compared to a net income of $43.3 million or 9 cents a share, in the year-earlier quarter.

After adjusting onetime items such as $77 million expenses linked to a legal settlement, earnings stood at 19 cents a share compared to 14 cents a share, in the same quarter of last year.

Revenue fell 3% to $536.5 million from $555.3 million, in the same quarter of last year.

Analysts surveyed by FactSet had forecasted earnings of 12 cents a share on revenue of $519 million.

Brocade said that the demand from the storage market was rebounding at a faster-than-anticipated rate. The storage market slowed down significantly in spring after several tech companies revealed pullback in corporate IT spending. Nevertheless, Brocade’s networking sales to the Federal government agencies fell 42% to $19.9 million due to cuts in federal budgets.

In order to counter fall in sales, the Company is slashing costs. In the latest period, operating costs fell 2% to $263.8 million while manufacturing costs dropped 8% to $198.3 million. The Company said that ongoing cost cutting measures will help saving $100 million annually by February.

 








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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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