Brocade Communications (BRCD)

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Brocade Communications Shares Plunged: What You Need to Know
By Travis Hoium | More Articles
November 23, 2010

BRCD
Brocade Communications
Motley Fool

Is Brocade Broken?

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Brocade Communications (Nasdaq: BRCD) shares fell 10% today after the company released earnings and weak guidance.

So what: Earnings were solid with revenue of $550 million and earnings per share of $0.14 for the quarter, both beating expectations. But investors were focused on next quarter's earnings guidance of $0.09 to $0.10 per share, well below expectations of $0.14.

Now what: The company sees risk in federal spending cuts. Brocade thinks trouble will be short-lived, but investors have their doubts, pushing shares lower almost all day long. Last quarter's earnings aren't enough for me to overlook the weak outlook for next quarter, so I've got to sit out today even given the new discount.