Data storage and networking company Brocade Communications Systems Inc. (BRCD), Thursday reported a sharply higher profit for the third quarter, on improved revenues and margins, as well as the absence of debt-related charges incurred a year ago. Brocade's earnings for the quarter breezed past Street estimates, as did revenues.
Separately, Brocade said its CEO Michael Klayko plans to resign once a successor is identified and following a transition period.
In the third quarter, Brocade's revenues grew 10 percent from last year, with its mainstay storage business advancing 13 percent and Ethernet business up 5 percent.
The data storage sector has benefited from increased data volumes and Brocade expects to remain focused on expanding its offerings to stay competitive.
"Fiscal Q3 was a great quarter for Brocade. With continued differentiation in our products and focused execution across our organization, we were able to overcome many issues in the current challenging macroeconomic environment," said CEO Klayko.
San Jose, California-based Brocade reported third quarter net profit of $43 million or $0.09 per share, significantly up from $2 million or $0.00 per share last year.
Excluding items, adjusted earnings for the quarter totaled $67 million or $0.14 per share, compared to $46 million or $0.09 per share a year ago.
On average, 25 analysts polled by Thomson Reuters expected the company to earn $0.12 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter grew to $555 million from $503 million in the prior year. Analysts estimated estimated revenues of $536.55 million for the quarter.
Gross margin for the quarter improved 3 basis points from last year to 61.3 percent, on higher revenue, favorable product mix and lower fixed costs. Operating margin was higher at 12.6 percent, compared to 6.8 percent a year ago.
BRCD closed Thursday at $5.63, up 6.03%, on a volume of 18.4 million shares on the Nasdaq. In after hours, the stock dropped 0.71%.
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