Brocade Communications Systems, Inc. Delivers Second-Quarter Revenue Surprise; Shares Rise

Shares of Brocade Communications Systems rose in after-hours trading, as the company presented a mild surprise on second-quarter sales.

May 22, 2014 at 8:11PM
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Source: Brocade.

Shares of Brocade Communications Systems (NASDAQ:BRCD) rose 1.8% in after-hours trading, following the release of second-quarter results for the 2014 fiscal year.

The networked data storage expert saw sales hold firm year over year at $537 million. Adjusted earnings rose 16% to $0.19 per share. Analysts were looking for earnings of $0.19 per share on $531 million in sales, so this report delivered a mild revenue surprise.

IP networking sales declined 4% from the year-ago period, while the larger storage area networking division's revenue increased by 1%. Storage-grade switches and embedded devices drove growth in the SAN segment; Multiple factors weighed on the IP networking group, ranging from soft U.S. federal government sales to the divestiture of Brocade's network adapter business.

Data center customers represented 57% of Brocade's revenue in the quarter, as sales to this target market increased 7% year over year. Brocade has a stated ambition to grow its data center operations.

In other news, Brocade introduced its first-ever dividend policy. The first quarterly payout of $0.035 per share will be made on July 2, to shareholders of record as of June 10. At this run rate and current share prices, Brocade's dividend amounts to a 1.6% effective yield.

"We see increasing customer interest in our software networking and Ethernet fabric technology as we drive innovation and disruption in data center networking," said Brocade CEO Lloyd Carney in a prepared statement.

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