Brocade Communications Systems Inc. (BRCD) Thursday reported an increase in second-quarter profit, driven largely by lower expenses, even as revenues declined reflecting soft demand in storage market.
Brocade's earnings for the quarter trumped analysts' estimates, however revenues fell short of expectations. Shares of the company slipped five percent in extended trading, following the announcement of results.
Brocade, which makes computer switches for data-storage networks, said its total revenues for the quarter dropped to $538.8 million from $543.4 million last year. Seventeen analysts had a consensus revenue estimate of $544.24 million for the quarter.
Chief Executive Lloyd Carney said, "Our storage area networking revenues did not meet our original expectations for Q2 due to short-term slowing in the storage market and execution challenges at certain of our large OEM partners."
Storage Area Networking business revenue dropped 6 percent to $374.4 million, due to soft demand in the overall storage market that impacted the company's revenue from some of its OEM partners.
IP Networking business revenue rose 15 percent to $164.4 million from a year ago, driven mainly by solid growth in Ethernet switch and routing revenues.
Gross margin, or gross profit as a percent of sales, remained flat at 62 percent, while adjusted gross margin improved to 65.1 percent from 64.8 percent last year.
Operating costs dropped to $276.9 million from $285.3 million last year.
San Jose, California-based Brocade's second-quarter profit rose to $47 million or $0.10 per share from $39 million or $0.08 per share last year.
Adjusted earnings for the three-month period rose to $0.17 per share from $0.15 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.
BRCD closed Thursday's regular trade at $5.74, up $0.12 or 2.14%, on the Nasdaq. The stock, however, slipped $0.28 or 4.88% in after-hours trade.
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