Brocade has impressed Wall Street with a set of fiscal third quarter numbers that show a massive hike in profits, despite a three per cent annual revenue decline.
For the three months to 27 July, the networking and storage vendor saw sales fall three per cent year on year to $537m ($345.9m). But GAAP net income soared to $119m, compared with $43m in the corresponding period last year. GAAP gross margins for the quarter stood at 63 per cent, up from 61.3 per cent in Q3 FY12.
The firm's storage business saw revenue drop two per cent annually to $369.2m in Q3. However, chief executive Lloyd Carney claimed that "the storage market is recovering more quickly than we had anticipated", following a softening of the sales environment in the previous quarter.
Q3 sales in the firm's networking business, which is founded on its $2.6bn buyout of Foundry Networks in 2008, fell six per cent year on year to $167.3m. The fall in turnover was chalked up to a decline in sales into the US federal government, as some "expected orders moved out of the third fiscal quarter in a challenging budget environment".
"In Q3, Brocade exceeded our guidance for revenue, non-GAAP operating margin, non-GAAP EPS, and cash flow," added Carney. "We are making great progress toward our spending reduction goal and are already seeing the benefits in our financial results and cash flow."
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