Times are tough at Blue Coat Systems
How bad could it be? Let's count the ways.
- Revenue fell from the same quarter last year by 11% to $109.5 million, lower than the $113.4 million consensus.
- Non-GAAP net income dropped to $0.18 per diluted share from last year's $0.40, lower than the $0.21 analysts were looking for.
- Guidance for the second quarter also fell short. The company expects revenue between $103 million and $110 million, with EPS ranging from a loss of $0.04 to a profit of $0.04. Analysts were expecting $116 million revenue to generate $0.23 in earnings.
- Gross margin continued to deteriorate sequentially, falling from 77.8% last quarter to 76.2%.
- Blue Coat Systems CEO Michael Borman has departed the company, effective immediately. The company has already found a replacement CEO, Gregory Clark, who will begin next month. In the meantime, a current director, Carol Mills, will serve as interim CEO.
There's no sugarcoating it. This is a dismal earnings report. Blue Coat Chairman David Hanna admitted that the "results were disappointing as they came in below our expectations." Borman, meanwhile, is handing over the reins after being appointed CEO just last August. This doesn't give much credence to the notion that Blue Coat is going to be able to pull off a turnaround.
Blue Coat's disappointing release adds to its string of lackluster quarters. Fool Bryan Hinmon briefly suggested Blue Coat as a possible takeover candidate by bigger players like Cisco Systems