Brocade (BRCD) has reported 21.09 percent fall in profit for the quarter ended Oct. 29, 2016. The company has earned $66.59 million, or $0.16 a share in the quarter, compared with $84.39 million, or $0.20 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $133.62 million, or $0.33 a share compared with $107.96 million or $0.21 a share, a year ago. Revenue during the quarter grew 11.63 percent to $657.30 million from $588.83 million in the previous year period. Gross margin for the quarter contracted 301 basis points over the previous year period to 63.95 percent. Total expenses were 87.39 percent of quarterly revenues, up from 79.75 percent for the same period last year. That has resulted in a contraction of 764 basis points in operating margin to 12.61 percent.
Operating income for the quarter was $82.87 million, compared with $119.22 million in the previous year period.
However, the adjusted operating income for the quarter stood at $160.32 million compared to $147.42 million in the prior year period. At the same time, adjusted operating margin contracted 65 basis points in the quarter to 24.39 percent from 25.04 percent in the last year period.
“Fiscal 2016 was a year of significant accomplishment,” said Lloyd Carney, Chief executive officer. “We delivered record revenue and expanded our market reach to address critical requirements at the network edge through our acquisition of Ruckus Wireless. In addition, we provided our customers with significant innovations across our product portfolio, including Gen 6 Fibre Channel, data center automation, Ruckus Cloud Wi-Fi, and next-generation data center routing. With a range of new IP Networking solutions expected to launch in the first quarter of fiscal 2017, we continue to advance our roadmap and help our customers transform their networks for digital business.”
Operating cash flow declines
Brocade has generated cash of $412.40 million from operating activities during the year, down 7.84 percent or $35.10 million, when compared with the last year. The company has spent $493.77 million cash to meet investing activities during the year as against cash outgo of $172.36 million in the last year.
The company has spent $100.30 million cash to carry out financing activities during the year as against cash outgo of $83.68 million in the last year period.
Cash and cash equivalents stood at $1,257.08 million as on Oct. 29, 2016, down 12.76 percent or $183.81 million from $1,440.88 million on Oct. 31, 2015.
Working capital declines
Brocade has witnessed a decline in the working capital over the last year. It stood at $980.52 million as at Oct. 29, 2016, down 23.98 percent or $309.31 million from $1,289.84 million on Oct. 31, 2015. Current ratio was at 2.41 as on Oct. 29, 2016, down from 3.29 on Oct. 31, 2015.
Debt increases substantially
Brocade has witnessed an increase in total debt over the last one year. It stood at $1,578.76 million as on Oct. 29, 2016, up 98.82 percent or $784.68 million from $794.08 million on Oct. 31, 2015. Total debt was 31.98 percent of total assets as on Oct. 29, 2016, compared with 19.66 percent on Oct. 31, 2015. Debt to equity ratio was at 0.62 as on Oct. 29, 2016, up from 0.31 as on Oct. 31, 2015. Interest coverage ratio deteriorated to 5.16 for the quarter from 12.14 for the same period last year.
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