Another Surprise From Brocade: $135 Million in Quarterly Sales - TheStreet

After accidentally releasing revenue guidance for its third quarter on Tuesday, data network gearmaker



said its fiscal second-quarter profit rose 17% on better-than-expected sales.

The San Jose, Calif.-based company said second-quarter earnings rose to $14 million, or 6 cents a share, compared with $12 million, or 5 cents a share, a year ago. Analysts had expected a 6-cent profit, according to Thomson Financial/First Call.

Sales rose to $135 million, up from last year's $115.2 million, and above the consensus estimate of $129.42 million.

The firm also said it generated $12 million of revenue in the second quarter from its new SilkWorm 12000 switch.

Regarding its outlook, Brocade said it expects third-quarter earnings of 8 cents a share and fourth-quarter earnings of 10 cents a share, both in line with the consensus. The company also expects fourth-quarter sales of $160 million to $165 million, compared with a consensus estimate of $158.3 million.

On Tuesday, Brocade let it slip that it expects third-quarter revenue of $145 million to $150 million, above the consensus estimate of $141.8 million. Brocade also said software growth was strong in the second quarter. As a result, the company believes software will account for 15% of total revenue by the fourth quarter. Brocade hadn't previously set a target for software's contribution to total sales for the fourth quarter.

"We are very optimistic about the outlook as we move into the second half of the year," said President and Chief Operating Officer Michael Byrd on a conference call.

As to why they expect to do so well in the second half, executives said they are at the beginning of a new product upgrade cycle and expect new switches to account for 75% of revenue in the third quarter.

During the call, Brocade said it continues to make investments in sales and marketing and research and development. The firm spent $33 million on R&D in the second quarter.