McData Corp., whose switches direct information in data- storage networks, reported a wider first-quarter net loss Tuesday because of costs related to severance and stock-based compensation. The shares fell as sales missed analysts’ expectations.
The net loss in the quarter ended April 30 was $9.5 million, or 6 cents a share, compared with a loss of $2.86 million, or 2 cents a share, a year earlier, the Broomfield-based company said. Sales rose 70 percent to $168.3 million.
Delays in new products and slowing demand from its top two customers, EMC Corp. and International Business Machines Corp., may have prompted McData to issue preliminary results this month at the low end of its previous forecast, A.G. Edwards & Sons Inc. analyst Aaron Rakers wrote in a May 5 report. Competition from Cisco Systems Inc. and Brocade Communications Systems Inc. may have hurt results, Canaccord Adams analyst Mark Kelleher wrote in a report Tuesday.
“McData is facing significant pricing competition from Cisco and significant technology pressure from Brocade,” Boston- based Kelleher wrote.
He rates the shares “hold” and doesn’t own any.
McData’s Class A shares fell 19 cents, or 5 percent, to $3.60 in extended trading after the results. They gained 14 cents to $3.79 at 4 p.m. in Nasdaq Stock Market composite trading and have dropped 1 percent this year.
In the current second quarter, profit excluding some costs is forecast to be 4 cents to 6 cents per share on sales of $170 million to $180 million, chief financial officer Scott Berman said on a conference call after the release of earnings.
