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Brocade Tops Bottom Line

Updated from 4:56 p.m. EDT

Storage networking-gear maker Brocade (BRCD - Get Report) exceeded second-quarter EPS earnings expectations and nearly doubled revenue, aided by its acquisition of McData.

This was Brocade's first full quarter after closing the nearly $1 billion acquisition of its smaller rival in January.

But Brocade said Thursday that it earned $800,000, or break-even EPS, compared with income of $13.5 million, or 5 cents a share a year ago, including items and related income tax adjustments from the McData buy.

Excluding items, the company earned $46.6 million, or 11 cents a share, a 76% increase from last year, beating Thomson First Call analysts' consensus estimate of 9 cents a share and the company's own guidance.

On this basis, operating margins expanded slightly to 16.8%, above high end of Brocade's 13% to 15% projection, and in line with its long-term model target of 15%-20%.

The company attributed the results to accelerated cost savings from the merger with McData. Brocade said it achieved savings of $131 million in the quarter, ahead of its plans to save $125 million to $150 million by the end of the year.

Revenue grew 89% to $345.3 million from $182.7 million a year ago, reflecting products and services acquired through the acquisition, and matching consensus expectations.

"The fundamentals of our business remain strong, and I am extremely pleased with our execution this quarter," said Chief Executive Michael Klayko.
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