McData blames weak IT spending for Q2 loss
SEC review too
McData today posted disappointing results for its second quarter, blaming a loss on soft IT spending and tight pricing.
The storage networking company reported revenue of $98.2m, which compares to the $107m reported in the same period one year ago. McData's net loss for the second quarter came in at $5.4m - a significant drop from the $9.1m profit reported last year. The company also announced that it will refile financial documents for 2003 and the first quarter of 2004 due to an SEC (Securities and Exchange Commission) review, although it does not expect to alter revenue figures from these periods.
"Our positive results for the quarter demonstrate that we are meeting the needs of an expanding market," said John Kelley, McDATA's CEO.
Kelley's optimism, however, was muted when McData blamed "a subdued IT spending environment and a continued competitive marketplace" for the less than stellar second quarter revenue total. The comments around IT spending are somewhat surprising given that EMC - McData's largest customer - enjoyed more than a 30 percent rise in revenue in its most recent quarter. Neither EMC, IBM nor Dell - all McData customers - complained about soft IT spending in their recent earnings reports.
McData's product revenue hit $74.9m in the period, and software revenue came in at $14.8m.
The company expects third quarter revenue between $98m and $102m and breakeven earnings per share. On the SEC issue, McData said, "The SEC routinely reviews public company filings from time to time. The company's previously reported results will not be affected by any supplements to its disclosures." It has moved a Sept. shareholder meeting to a later date, as it works to resubmit the 2003 and Q1 2004 filings. ®
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