McData Swings to a Loss

Subdued IT spending hurts second-quarter results.
Publish date:

Updated from Aug. 19

Shares of



dipped Friday as the company swung to a loss in its fiscal second quarter, hurt by a subdued IT spending environment and a competitive market for its enterprise storage products, the company said after the bell Thursday.

The stock was recently off 15 cents, or 3.2%, to $4.53.

For the quarter ended July 31, the Broomfield, Colo.-based company posted a net loss of $5.4 million or 5 cents a share, a reversal from last year's profit of $9.1 million or 8 cents a share.

Excluding special charges, earnings totaled $2 million or 2 cents a share, above the Wall Street consensus estimate for a loss of one penny.

Second-quarter revenue notched $98.2 million, an increase of 1% from the preceding quarter and slightly above the $96.2 million consensus estimate.

Gross margin slid to 55.8% from the prior quarter's 56.3%.

Looking forward, McData gave guidance for third-quarter sales in a range of $98 million to $102 million, with pro forma EPS in a range of break-even to a one-penny profit. On a per-share basis, net income according to generally accepted accounting principles should be about 7 cents below the pro forma EPS result.

The outlook is roughly in line with the consensus estimate for a penny profit on earnings of $99.5 million for the quarter ending in October.

Shares of McData closed Thursday at $4.68, up 6 cents, or 1.3%.