logo
  Join        Login             Stock Quote

Brocade Communications: CEO Overhang Lifted, But Uncertainties Remain

 January 17, 2013 02:56 PM
 


(By Mani) Brocade Communications Systems, Inc. (BRCD) concluded its CEO search, hiring Lloyd Carney to replace retiring CEO Michael Kalyko. Carney will also take a seat on Brocade's board.

Now, Brocade has put the CEO overhang behind it, it should allow investors to focus on execution. The news had a neutral effect on the shares and representing a mix of positives and negatives.

Positively, Carney knows software. He was previously the CEO of Micromuse, a network management software company. In addition, he was the CEO of Xsigo Systems, a privately held data center virtualization company acquired by Oracle in July, 2012.

[Related -International Business Machines Corp. (IBM): What To Watch In Q3 Results?]

The experience at Xisgo Systems could complement Brocade's early stage development of a software-defined networking strategy and help Brocade achieve its goal of moving up the stack.

"We also like Mr. Carney's practical sense for creating shareholder value. He's proven that if the right offer comes along, he's not afraid to cash in his chips," Oppenheimer analyst Ittai Kidron wrote in a note to clients.

That said, Carney hasn't served as the leader of a large networking company despite executive positions at Juniper Networks (NASDAQ: JNPR) and Nortel. This could leave room for a tricky transition.

In addition, there are risks associated with hiring a CEO from the outside and executives who may have been in the running for CEO could depart. Last, Carney had been out of the public eye since his role as CEO of Micromuse ended when he sold the company to International Business Machines (NYSE: IBM) in 2005.

[Related -International Business Machines Corp. (NYSE:IBM): From Dow Dog to Best in Show in 2014?]

"Overall, we see positives and negatives but believe filling the CEO spot allows for more focus on execution. And while recent quarters have been encouraging, we remain on the sidelines awaiting proof of a consistent turnaround," Kidron said.

Separately, Brocade priced its previously announced offering of $300 million in aggregate principal amount of 4.625 percent senior notes that will mature in 2023 at an issue price of 100 percent of the principal amount of the notes. The sale of the notes is expected to close on or about January 22, 2013.

Brocade intends to use the net proceeds of the offering, together with cash on hand, to redeem all of Brocade's outstanding 6.625 percent senior secured notes due 2018.

California-based Brocade, which provides Ethernet networking solutions, is expected to report its first-quarter earnings on Feb.21. Wall Street expects earnings of 16 cents a share on revenue of $575.84 million, according to analysts polled by Thomson Reuters.

Shares of Brocade are nearing its 50-day moving average of $5.50. They were trading between $4.18 and $6.44 for the past 52-weeks.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageQihoo 360 Technology Co Ltd. (QIHU) Q2 Earnings Preview: A Green Monday

Qihoo 360 Technology Co Ltd. (NYSE:QIHU) will report its second quarter 2014 financial results on Monday, read on...

article imageSix Stocks that Could Outperform in the next 90 days

Earlier today, Goldman Sachs put out its list of the 50 stocks that Matter Most. It’s a list of the 50 read on...

article imageFoot Locker, Inc. (FL) Q2 Earnings Preview: Running Past the Street View

Foot Locker, Inc. (NYSE:FL) plans to report financial results for its second quarter ended August 2, 2014 read on...

article imageRoss Stores, Inc. (ROST) Q2 Earnings Preview: Could Be Better Than Expected

Ross Stores, Inc. (NASDAQ:ROST) will announce its second quarter 2014 earnings results on Thursday, August read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.