LONDON, UK / ACCESSWIRE / June 19, 2017 / Pro-Trader Daily publishes post-earnings coverage on Brocade Communications Systems, Inc. (NASDAQ: BRCD) following the Company's disclosure of its second quarter fiscal 2017 financial results on May 25, 2017. The storage area networking and Internet protocol networking solutions missed top- and bottom-line expectations. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Brocade reported second quarter revenue of $553 million, up 6% compared to revenue of $523 million in Q2 FY16. The Company's reported numbers lagged behind analysts' estimates for revenue of $587 million.
During Q2 FY17, Brocade reported GAAP gross margin of 62.0% compared to gross margin of 66.9% in Q2 FY16. The Company posted non-GAAP gross margin of 65.3% for the reported quarter compared to 68.2% in the prior year's same quarter. Brocade recorded GAAP operating margin of negative 1.1% compared to operating margin of 15.8% in Q2 FY16. The Company posted non-GAAP operating margin of 11.1% versus 22.4% in the year ago same period.
For Q2 FY17, Brocade reported net loss of $11 million, or $0.03 per saluted shares, compared to net income of $43 million, or $0.11 per diluted share, in Q2 FY16. The Company's non-GAAP diluted earnings were $0.10 for the reported quarter, down from non-GAAP diluted EPS of $0.22 in the prior year's same quarter. The Company attributed the y-o-y decline in both GAAP and non-GAAP diluted earnings to lower SAN and wired IP Networking revenue and the incremental operating expenses associated with the Ruckus Wireless acquisition. Furthermore, the reported quarter results were also negatively impacted by the inclusion of certain acquisition-related expenses in Q2 FY17. Analysts were expecting earnings of $0.20 per share.
On November 02, 2016, Brocade announced that it had entered into a definitive agreement under which Brocade would be acquired by Broadcom Limited. In light of the pending acquisition, Brocade will not provide fiscal Q3 2017 guidance and will not conduct an earnings conference call to discuss its financial results.
During Q2 FY17, Brocade's SAN product revenue of $282 million declined 5% on a y-o-y basis, primarily attributed to lower director and embedded switch sales, which declined 6% and 12% on a y-o-y basis, respectively. The Company stated the revenue performance was impacted by competition from alternative storage networking technologies and architectures, and customer uncertainty surrounding the pending acquisition of Brocade by Broadcom.
For Q2 FY17, Brocade's IP Networking product revenue of $173 million, which included $71 million of product revenue from Ruckus Wireless, surged 32% on a y-o-y basis, driven by the acquisition of Ruckus Wireless in Q3 FY16. This was partially offset by lower wired switch and router revenue due in part to Broadcom's planned divestiture of Brocade's IP Networking business.
In the earnings press release, Brocade's Board of Directors has declared a regular third fiscal quarter cash dividend of $0.055 per share of the Company's common stock. The dividend payment will be made on July 05, 2017, to stockholders of record at the close of market on June 12, 2017.
As on April 29, 2017, Brocade had cash and cash equivalents worth $1.30 billion compared to $1.26 billion as of October 29, 2016. The Company's long-term debt, net of current portion, was $1.47 billion at the end of the reported quarter compared to $1.50 billion as on October 29, 2016.
Brocade Communications Systems' share price finished last Friday's trading session at $12.66, slightly up 0.24%. A total volume of 4.81 million shares have exchanged hands, which was higher than the 3-month average volume of 4.18 million shares. The Company's stock price soared 1.69% in the last three months, 2.26% in the past six months, and 40.20% in the previous twelve months. Additionally, the stock gained 1.36% since the start of the year. Shares of the Company have a PE ratio of 86.71 and have a dividend yield of 1.74%. The stock currently has a market cap of $5.18 billion.
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