Brocade Communications Pulls Back Its Outlook

Brocade Communications Systems Inc. said its second-quarter results fell short of its previous guidance forecasts, citing overall softness in information-technology spending.

Shares pulled back 11% to $8.57 in early trading in New York. Including that decline, the stock has still risen 9.3% in the past three months.

The networking-solutions company now expects $518 million to $528 million in revenue, compared with the range of $542 million to $562 million it provided in February. The company expects adjusted profit between 21 cents and 23 cents a share, down from a prior range of 22 cents to 24 cents. Analysts polled by Thomson Reuters were expected 23 cents a share on $551.8 million.

Lloyd Carney, Brocade's chief executive, said the results reflected softness in IT spending. Mr. Carney pointed to weaker demand from the U.S. government and in its service provider business.

Sunnyvale, Calif.-based Brocade was originally known for networking hardware used in data storage applications, but it has branched into other networking segments, including routers and switches sold in competition with the likes of Cisco Systems Inc.

Brocade agreed in April to buy Ruckus Wireless for about $1.2 billion amid a series of moves by network-equipment companies to expand their Wi-Fi offerings.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

May 02, 2016 10:55 ET (14:55 GMT)

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