Brocade Earnings (BRCD) Preview

Secondary Plays: CSCO, ELX, QLG ...

BRCD update: 02/15/2008 and stockchart after the market close

Brocade beats by $0.01, misses on revs (6.80 -0.20) : Reports Q1 (Jan) earnings of $0.16 per share, excluding non-recurring items, $0.01 better than the First Call consensus of $0.15; revenues rose 55.1% year/year to $347.8 mln vs the $352.2 mln consensus.

On conference call, co sees Q2 sequential ASP declines in low single digits. Co sees Q2 revs of $340 - $355 vs consensus of $350.57 mln. Sees Q2 EPS of $0.13 - $0.15 vs consensus of $0.14.Expects Q2 gross margins of 58-60%.

14-Feb-08 15:40 ET

On 02/06 CSCO -7.3% on earnings/guidance

Brocade Communications (BRCD) is set to report 1Q08 earnings after the close 02/14/08 with a conference call following at 4:30 ET.

Current consensus is for EPS of $0.15 on revs of $352.23...

Recent Earnings History:
Q4 (11/29): BRCD beat by $0.04 with revs in-line. The stock closed lower by nearly 6% the following day;
Q3 (8/23): BRCD beat by $0.02, revs in-line. On the call, the company guided Q4 revs below consensus and EPS in-line. The stock closed up marginally higher the next day;
Q2 (5/31): BRCD beat by $0.02 with revs in-line. On the call, the company guided Q3 revs below consensus and EPS in-line:
Q1 (2/26): BRCD beat by $0.04 and beat on revs. On the call, the company guidedQ2 revs and EPS in-line...

Analyst Expectations:
Analysts are generally expecting the company to report an in-line quarter. UBS says their checks pointed to overall solid demand for BRCD products, however, the firm says BRCM experienced lighter revenues in areas believed to be discretionary and customers choose to delay purchases, particularly with FAN products. Analysts seem to be less positive for BRCD's guidance, given recent comments from Cisco (CSCO) and with general economic concerns...

Areas of Focus on the Call:
1) Guidance: BRCD historically issues EPS, revenue, and gross margin guidance for the next quarter. The key issue for guidance, and whether the company can guide in-line or better, is whether new product introductions will be enough to offset an overall moderation in demand;
2) Competition/CSCO: BRCD has recently been closing the gap on CSCO's growth premium over the company in storage related revenues. Of interest will be whether the company feels this trend is sustainable;
3) EMC/IBM: EMC appears close to launching 8Gbps Brocade products, into strong demand. Also, IBM may be selling these products by the end of March. The financial impact of the new product intros will likely be a focus on the call...

About BRCD:

Brocade Communications Systems, Inc. delivers industry-leading platforms, solutions, and services for intelligently connecting, managing, and optimizing IT resources in shared storage environments. The world's premier systems, server, and storage providers offer the Brocade SilkWorm family of Storage Area Network connectivity platforms as the foundation for shared storage in organizations of all sizes. In addition, the Brocade Tapestry family of IT infrastructure solutions extends the ability to proactively manage and optimize application and information resources across the enterprise. Using Brocade solutions, organizations are better positioned to reduce cost, manage complexity, and satisfy business compliance requirements through optimized use and management of their IT resources.