Brocade Communications Handily Beats Earnings Estimates, Stock Surges

Jacob Harper |

San Jose, Calif.-based data storage manufacturer Brocade Communication Systems ($BRCD) reported excellent third quarter earnings on Aug. 13 (the company’s fiscal year ends in September) that more than doubled analyst estimates, and their stock skyrocketed.

Demand for data storage devices increased greatly for the company, with CEO Lloyd Carney saying the trend is occurring industry wide, and doesn’t look to dissipate anytime soon.  The company has markedly increased their storage area network (SAN) business, which pool storage resources to ease access for big companies. The company reported that this area of their business increased a whopping 61 percent.

Data storage firms are experiencing a boom as companies rush to get into the burgeoning business of Big Data. Sifting through the terrabytes of information companies have on their customers is a giant undertaking, and as companies bide time figuring out how to parse that information, the need for the hardware firms like Brocade produce can be expected to increase substantially. The company has touted themselves as being a "thought leader" in Big Data solutions.

Brocade has been further buoyed by a positive court decision levied against a major rival. In 2012, Brocade won a major lawsuit against A10 Networks over charges of intellectual property infringement.  A10 settled with Brocade in May, paying the company $5 million and $70 million in security notes. The total gain from the lawsuit for the quarter was reported to be around $76.8 million.

For their third quarter 2013 earnings report, Brocade reported a net profit of $119 million, or $0.26 per share, versus the net profit of $47 million, or $0.10 per share, from the same period a year ago. Revenue for the quarter was $537 million, as compared to $539 million from the previous year. Analysts were expecting a profit of $0.12 per share on revenues of $519 million.

Brocade’s stock is up 15.07 percent to hit $7.95 a share.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BRCD Brocade Communications Systems Inc. 12.38 -0.01 -0.08 7,242,744
ACEHF Ace Hardware Indonesia 0.06 0.00 0.00 0

Comments

Emerging Growth

Taranis Resources Inc.

Taranis Resources Inc is an exploration stage company. The Company along with its subsidiaries is engaged in the acquisition and exploration of mineral properties. Its projects include Thor Property in…

Private Markets

8tracks

Our mission is to be the best place for people who care about music to create and discover thoughtfully curated playlists. In essence, 8tracks is a platform for online mixtapes.

Dropbox, Inc.

Dropbox is a service that allows their users to bring all photos, docs, and videos anywhere, and share them easily. Any file saved to Dropbox will automatically save to all…