Foundry Scores a Near Miss
For its first quarter, which ended March 31, Foundry reported net income of $11.4 million, or 8 cents per share, on revenues of $114 million, compared with net income of $20.6 million, or 14 cents per share, on revenues of $116 million the previous quarter.
For its first quarter a year ago, Foundry reported net income of $9.9 million, or 7 cents per share, on revenues of $84.6 million.
Analysts had expected the sequential drop in revenues, but they thought Foundry would report stronger profits. Foundry's non-GAAP net income of 12 cents per share fell short of the analyst consensus of 13 cents, according to Reuters Research .
Foundry shares were down $1.66 (9.7%) to $15.40 in early after-hours trading.
Foundry's earnings release gave no indication of anything having gone wrong, other than to note government business was down slightly. Government sales of $22 million represented 19 percent of Foundry's revenues, down from 21 percent the previous quarter.
The government has been a source of headaches for Foundry due to "lumpiness," a tendency for large orders to get delayed, messing up revenues. "If we look at the whole year, the federal business will be very good. The question will always be: What are the quarterly fluctuations?" said CEO Bobby Johnson on a conference call with analysts today.
During the call, CFO Tim Heffner noted that operating expenses were up by about $5 million during the first quarter. Of that, $3 million came from payroll-related costs such as taxes, those being higher due to a "large number of employee stock option exercises in the first quarter," he said.
The quarter did see the first sales of Foundry's XMR router and MLX metro router, which drew interest from service providers and large enterprises, Johnson said on the call. (See Foundry Reinforces Metro.) Each platform racked up "millions of dollars" during the quarter, he claimed.
Foundry has avoided giving forecasts for upcoming quarterly revenues, sometimes citing the unpredictability of its government business. Analysts polled by Reuters Research expect Foundry to report second-quarter profits of 13 cents per share on revenues of $116.6 million.
— Craig Matsumoto, Senior Editor, Light Reading