BROCADE COMMUNICATIONS SYSTEMS, INC. (BRCD, Financial) filed Quarterly Report for the period ended 2009-05-02.
Brocade Communications Systems Inc. delivers industry-leading platforms solutions and services for intelligently connecting managing and optimizing IT resources in shared storage environments. The world's premier systems server and storage providers offer the Brocade SilkWorm family of Storage Area Network connectivity platforms as the foundation for shared storage in organizations of all sizes. In addition the Brocade Tapestry family of IT infrastructure solutions extends the ability to proactively manage and optimize application and information resources across the enterprise. Using Brocade solutions organizations are better positioned to reduce cost manage complexity and satisfy business compliance requirements through optimized use and management of their IT resources. BROCADE COMMUNICATIONS SYSTEMS, INC. has a market cap of $2.75 billion; its shares were traded at around $7.1 with a P/E ratio of 14.2 and P/S ratio of 1.9.
Historically, domestic revenues have accounted for between 56% and 69% of total net revenues. International revenues primarily consist of sales to customers in Western Europe, the greater Asia Pacific region and Japan. For the three and six months ended May 2, 2009 as compared to the three and six months ended April 26, 2008, international revenues decreased as a percentage of total net revenues primarily as a result of the shift to North America due to the Foundry acquisition. Revenues are attributed to geographic areas based on where our products are shipped. However, certain OEM customers take possession of our products domestically and then distribute these products to their international customers. Because we account for all of those OEM revenues as domestic revenues, we cannot be certain of the extent to which our domestic and international revenue mix is impacted by the practices of our OEM customers, but we believe that international revenues comprise a larger percentage of our total net revenues than the attributed revenues may indicate.
A significant portion of our revenue is concentrated among a relatively small number of OEM customers. For the three months ended May 2, 2009, three customers each represented ten percent or more of our total net revenues for a combined total of 43% of our total net revenues. For the three months ended April 26, 2008, the same three customers each represented ten percent or more of our total net revenues for a combined total of 65% of our total net revenues. The decrease in the percentage reflects the acquisition of Foundry and its dispersion of revenue among a non-OEM customer base. We expect that a significant portion of our future revenues will continue to come from sales of products to a relatively small number of OEM customers and, as a result of the Foundry acquisition, to the U.S. government or individual agencies within the U.S. government. Therefore, the loss of, or a decrease in the level of sales to, or a change in the ordering pattern of, any one of these customers could seriously harm our financial condition and results of operations.
A majority of our trade receivable balance is derived from sales to OEM partners in the computer storage and server industry. As of May 2, 2009, two customers accounted for 14% and 11%, respectively, of total accounts receivable. As of October 25, 2008, three customers accounted for 30%, 17% and 14%, respectively, of total accounts receivable. We perform ongoing credit evaluations of our customers and generally do not require collateral on accounts receivable balances. We have established reserves for credit losses, sales allowances, and other allowances. While we have not experienced material credit losses in any of the periods presented, there can be no assurance that we will not experience material credit losses in the future.
Total gross margin for the three months ended May 2, 2009 increased in absolute dollars by $54.3 million and was 51.3%, a decrease of 6.6 percentage points from 57.9% for the three months ended April 26, 2008. The decrease in total gross margin percentage for the three months ended May 2, 2009 as compared to the three months ended April 26, 2008 was primarily due to the increased mix of IP Products revenue, which carries a lower overall gross margin, increased stock-based compensation expense, and amortization of in
Read the The complete ReportBRCD is in the portfolios of NWQ Managers of NWQ Investment Management Co, John Paulson of Paulson & Co., Kenneth Fisher of Fisher Asset Management, LLC, PRIMECAP Management.
Brocade Communications Systems Inc. delivers industry-leading platforms solutions and services for intelligently connecting managing and optimizing IT resources in shared storage environments. The world's premier systems server and storage providers offer the Brocade SilkWorm family of Storage Area Network connectivity platforms as the foundation for shared storage in organizations of all sizes. In addition the Brocade Tapestry family of IT infrastructure solutions extends the ability to proactively manage and optimize application and information resources across the enterprise. Using Brocade solutions organizations are better positioned to reduce cost manage complexity and satisfy business compliance requirements through optimized use and management of their IT resources. BROCADE COMMUNICATIONS SYSTEMS, INC. has a market cap of $2.75 billion; its shares were traded at around $7.1 with a P/E ratio of 14.2 and P/S ratio of 1.9.
Highlight of Business Operations:
The increase in total net revenues for the six months ended May 2, 2009 as compared to total net revenues for the six months ended April 26, 2008 reflects growth in sales of Data Storage products, IP Products and Global Services offerings. The increase in Data Storage product revenues for the period reflects a 4.1% increase in the number of ports shipped due to our continued growth in the director and embedded switch market, as well as a mix shift from 4 Gigabit director and embedded switch products to 8 Gigabit director and embedded switch products, which carry a higher price per port, partially offset by a 4.5% decrease in average selling price per port. The increase in revenues from IP Products was due to sales of network switching and router products as a result of our acquisition of Foundry in December 2008, partially offset by a decrease in the volume of our Files business. The increase in Global Services revenues was a result of the acquisitions of Foundry in December 2008 and SBS in March 2008, and the continued expansion of our installed base.Historically, domestic revenues have accounted for between 56% and 69% of total net revenues. International revenues primarily consist of sales to customers in Western Europe, the greater Asia Pacific region and Japan. For the three and six months ended May 2, 2009 as compared to the three and six months ended April 26, 2008, international revenues decreased as a percentage of total net revenues primarily as a result of the shift to North America due to the Foundry acquisition. Revenues are attributed to geographic areas based on where our products are shipped. However, certain OEM customers take possession of our products domestically and then distribute these products to their international customers. Because we account for all of those OEM revenues as domestic revenues, we cannot be certain of the extent to which our domestic and international revenue mix is impacted by the practices of our OEM customers, but we believe that international revenues comprise a larger percentage of our total net revenues than the attributed revenues may indicate.
A significant portion of our revenue is concentrated among a relatively small number of OEM customers. For the three months ended May 2, 2009, three customers each represented ten percent or more of our total net revenues for a combined total of 43% of our total net revenues. For the three months ended April 26, 2008, the same three customers each represented ten percent or more of our total net revenues for a combined total of 65% of our total net revenues. The decrease in the percentage reflects the acquisition of Foundry and its dispersion of revenue among a non-OEM customer base. We expect that a significant portion of our future revenues will continue to come from sales of products to a relatively small number of OEM customers and, as a result of the Foundry acquisition, to the U.S. government or individual agencies within the U.S. government. Therefore, the loss of, or a decrease in the level of sales to, or a change in the ordering pattern of, any one of these customers could seriously harm our financial condition and results of operations.
A majority of our trade receivable balance is derived from sales to OEM partners in the computer storage and server industry. As of May 2, 2009, two customers accounted for 14% and 11%, respectively, of total accounts receivable. As of October 25, 2008, three customers accounted for 30%, 17% and 14%, respectively, of total accounts receivable. We perform ongoing credit evaluations of our customers and generally do not require collateral on accounts receivable balances. We have established reserves for credit losses, sales allowances, and other allowances. While we have not experienced material credit losses in any of the periods presented, there can be no assurance that we will not experience material credit losses in the future.
Total gross margin for the three months ended May 2, 2009 increased in absolute dollars by $54.3 million and was 51.3%, a decrease of 6.6 percentage points from 57.9% for the three months ended April 26, 2008. The decrease in total gross margin percentage for the three months ended May 2, 2009 as compared to the three months ended April 26, 2008 was primarily due to the increased mix of IP Products revenue, which carries a lower overall gross margin, increased stock-based compensation expense, and amortization of in
Read the The complete ReportBRCD is in the portfolios of NWQ Managers of NWQ Investment Management Co, John Paulson of Paulson & Co., Kenneth Fisher of Fisher Asset Management, LLC, PRIMECAP Management.
