Brocade bucks sell-off thanks to strong earnings, outlook

Brocade Communications shares rallied up $13.63, or 9 percent, to $167.38 Thursday after it topped analysts' estimates in its fourth quarter and predicted sales growth in excess of 150 percent for the fiscal year.

In the fourth quarter, Brocade raked in $27.2 million, or 22 cents a share, on sales of $132.1 million.

First Call Corp. consensus expected the maker of network storage equipment to earn 20 cents a share in the quarter.

It also set a 2-for-1 stock split effective Dec. 22 and predicted its fiscal 2001 sales would improve by more than 150 percent from fiscal to 2000 to around $830 million.

That news, combined with generally positive comments from analysts, helped Brocade (Nasdaq: BRCD) avoid Thursday's massive tech sell-off.

The $132.1 million in sales was a 339 percent improvement from the year-ago quarter and easily surpassed the $117.5 million predicted by most analysts.

Brocade now claims nearly 60 percent of the storage area networking market, including a gain of almost 5 percent in the fourth quarter.

"At this point, we're very, very optimistic about SANs adoption," chairman and CEO Greg Reyes told analysts. "We have an incredibly strong outlook and our best backlog ever going into the next quarter."

On Thursday, several analysts weighed in with their thoughts on the stock.

Robertson Stephens Paul Johnson reiterated his "buy" rating on the stock.

"Given the current growth assumptions for the overall SAN market, and our belief that Brocade can continue to capture market share, we believe our new estimates, especially for fiscal 2002, are conservative," he wrote in a research note.

Banc of America Securities analyst Shaw Wu called it "another killer quarter" and raised his fiscal 2001 estimates while reiterating a "buy" rating.

C.E. Unterberg, Towbin's James Poyner also reiterated his "buy" rating on the stock due to "stellar top and bottom line performance."

However, USB Piper Jaffray's Askok Kumar kept his "neutral" rating on the stock, calling Brocade "no Mark McGwire!"

Goldman Sachs analyst Laura Conigliaro her fiscal 2001 earnings estimate to $1.25 from $1.05 a share and left the stock on its "recommended list."

Brocade shares moved up to a 52-week high of $267.44 in October after falling to a low of $55.06 in December.

Sixteen of the 18 analysts following the stock maintain either a "buy" or "strong buy" rating.

Sergio Non contributed to this report.