* Q1 adj EPS $0.20 vs est $0.13
* Q1 rev up 3 pct at $561 mln vs est $542.4 mln
* Shares rise 7 pct after hours
By Siddharth Cavale and Nicola Leske
Feb 21 Storage gear maker Brocade
Communications Systems Inc reported
better-than-expected quarterly results, helped by a rise in
sales of its storage equipment products, but concerns loomed
over its ethernet business.
Shares of the San Jose, California-based company, which have
rebounded more than 80 percent since their August 2011 lows,
jumped 7 percent to $5.85 in after-hours trading on Tuesday.
Revenue rose 3 percent to $561 million in the quarter. Sales
from the company's storage segment, which brings in about 70
percent of its total revenue, grew 4 percent to $406.4 million.
However, the ethernet sales are a concern, analyst Edward
Zabitsky of ACI Research said. Sales in the ethernet business
fell 18 percent sequentially, hurt by softness in federal sales
and lower enterprise revenue.
"They are very dependent on the U.S. economy, which is doing
better. They have the right strategy but we're in a risky
environment," Zabitsky said and added the company was also
facing a lot of pressure from rivals like Cisco Systems
For the first quarter, the company posted a net income that
more than doubled to $59 million, or 12 cents a share. In the
year-ago quarter, profit was $27 million, or 5 cents a share.
Last month, Reuters reported the company had received
first-round bids from a handful of potential buyers and hired
Frank Quattrone's Qatalyst Partners to focus on a deal that
could result in a leveraged buyout.
Shares of Brocade, whose current sale process is the third
since 2009, closed at $5.50 on the Nasdaq.