McData's Loss Widens

Higher costs hamper results.
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Updated from May 30

Shares of

McData

(MCDTA)

slipped Wednesday as investors reacted to the company's announcement that its first-quarter loss has tripled.

In recent trading, shares were off 12 cents, or 3%, to $3.67.

The storage-gear maker reported Tuesday that its loss widened to $9.5 million, or 6 cents a share, compared with a year-ago loss of $2.9 million, or 2 cents a share. Total revenue was $168.3 million, up 70% from the $98.9 million reported last year.

Total operating expenses jumped 51% to $86 million, and the loss from operations more than doubled to $8.5 million from $3.4 million.

The results were generally in line with guidance the company gave earlier in the month. Analysts polled by Thomson First Call were looking for slightly stronger sales -- $170.4 million and an EPS of 4 cents.

Looking to the second quarter, the company said Wednesday it expects revenue of $170 million to $180 million; gross margins of 47% to 49%; operating expenses ranging from $72 million to $76 million; non-GAAP EPS of 4 cents to 6 cents and a tax rate of 35%.

Wall Street was looking for sales of $178 million with EPS of 6 cents.