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Brocade posts strong full year revenue but profits are hit hard

Ahead of the acquisition by Broadcom, Brocade posts a mixed set of results

Brocade today reported financial results for its fourth quarter and full fiscal year 2016 ahead of its acquisition by Broadcom.

The firm reported fourth quarter revenue of $657m, an increase of 12% year-over-year. Revenue for fiscal year 2016 was $2.35bn, up 4% year-over-year. However, the Q4 increase was driven by $96m of Ruckus Wireless revenue, following the acquisition in Q32016.

Fourth quarter profit was $66m, down 21% from the same period last year. Profit for the full year was $214m, down a significant 37% from 2015.

The digesting of Ruckus Wireless added siginificant operating expenses for the year - nearly $200m in total.

“Fiscal 2016 was a year of significant accomplishment,” said Lloyd Carney, CEO. “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 centre automation, Ruckus Cloud Wi-Fi, and next-generation data centre 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.”

Earlier this month Broadcom announced that it plans to acquire Brocade for approximately $5.9bn.

The plan is to divest Brocade’s IP Networking business, which pulled in $730m of revenue for the fiscal year. The division, which includes Ruckus, consists of wireless and campus networking, data centre switching and routing, and software networking solutions.

The transaction is expected to close in the second half of Broadcom’s fiscal year 2017, which commenced on October 31. In light of the pending acquisition, Brocade did not provide Q1 2017 guidance and said that it would not be holding a conference call to discuss the financial results.



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