Shares in Brocade Communications Systems Inc. (Nasdaq: BRCD) fell 8 percent Thursday morning, to $3.90 a share, after the company turned in a net loss for its first quarter of 2003 (see Brocade Hits Lowered Q1 Targets).
Brocade's results, reported Wednesday night, are in contrast with those of McData Corp. (Nasdaq: MCDTA) and Network Appliance Inc. (Nasdaq: NTAP), which both finished strong end-of-year quarters (see NetApp Q3 Profit Triples, and McData Blows Doors Off Q4).
Still, Brocade met its reduced expectations, reporting revenue of $123.1 million and a net loss of $6.9 million, or 3 cents per share, for the quarter ended Jan. 25, 2003. Excluding a restructuring charge of $10.1 million related to job cuts of about 160 employees, Brocade said it earned $300,000, or roughly break-even (see Brocade Cleans House).
For the second quarter of 2003, Brocade now expects revenue to be between $128 million and $133 million, or up 4 percent to 8 percent sequentially. However, the company expects to break even for the quarter, compared with previous estimates of a slight profit.
Brocade said it will add a $7 million R&D charge to its operating expenses next quarter without a corresponding increase in revenue, related to its acquisition of Rhapsody Networks. Rhapsody products will begin shipping in the second half of the year. Brocade executives also mentioned that the restructuring was complete; however, there is still a non-cash charge for in-process R&D and intangibles that the company will take in the current quarter. That charge will amount to between $125 million and $135 million (see Brocade Scoops Up Rhapsody).
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