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What: Blue Coat Systems (Nasdaq: BCSI ) dropped 25% in intraday trading today after issuing a disappointing earnings report and guidance and replacing its CEO.
So what: Non-GAAP EPS of $0.18 declined 55% year over year and fell short of the $0.21 consensus estimate. GAAP EPS of $0.06 fell from $0.29 in the year-earlier quarter. Revenue of $110 million dropped 11% year over year. The company blamed the disappointing results on "go-to-market challenges" and weakness in federal spending.
Now what: This was the third consecutive quarter that the company missed the consensus estimate and reported a year-over-year earnings decline. For the current quarter, management guided to revenue of $103 million to $110 million, well below the consensus forecast of $116 million, and non-GAAP diluted EPS of -$0.04 to $0.04, nowhere near the consensus estimate of $0.23 (or the year-earlier quarter's $0.38). The chairman of the board said the company is "taking necessary actions" and replacing CEO and board member Michael Borman with Gregory Clark. He was CEO of enterprise software company Mincom prior to its acquisition last month. The old turnaround plan clearly wasn't working for Blue Coat Systems. The stock may be "dead money" until a new turnaround plan is revealed.
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