WEB NEWS Comments & Business Outlook
First Quarter 2014 Results
Revenue of $75.9 million for its first quarter of fiscal 2014 ending September 30, 2013. This represents a 0.3% decrease compared to revenue of $76.1 million reported for the first quarter of fiscal 2013 and a 4.5% decrease compared to the fourth quarter of fiscal 2013.
On a non-GAAP basis, net income for the first quarter of fiscal 2014 was $5.3 million, or $0.06 per diluted share, compared to non-GAAP net income for the first quarter of fiscal 2013 of $3.5 million, or $0.04 per diluted share.
"Extreme's first quarter results were at the high end of guidance on both revenue and earnings per share," said Chuck Berger, president and CEO for Extreme Networks. "We are pleased with these results in light of product shortages that persisted for most of the quarter, seasonally slow July and August demand, and the announcement of our acquisition of Enterasys in mid-September. We extended our position in the sports venue market with wins at the Philadelphia Eagles, Lincoln Financial Field and the NBA's Carolina Bobcats, at the Time Warner Cable Arena. The Company added alliances with Aviat Networks, who will use Extreme switches and routers in their microwave networking solutions, and Silicon Graphics Corp. who will deploy Extreme switches in their high performance data center solutions, particularly for cloud and big data applications.
"Extreme Networks announced the completion of the acquisition of Enterasys Networks on November 1st. The combined company ranks fourth in the Ethernet switching market share with the scale to increase investment in product development, demand generation, and industry leading customer service and support. We have already made considerable progress towards integrating the two companies including establishing the executive leadership team. Chris Crowell, formerly CEO of Enterasys, has accepted the position of COO and will be directly responsible for sales and marketing. Chris brings extensive experience in the networking industry, exceptional leadership and a close relationship with the Enterasys customer base and partner community."
Business Outlook :
Financial targets for the second fiscal quarter reflect the acquisition of Enterasys Networks on October 31, 2013, and will include Enterasys results for the months of November and December. For its second quarter of fiscal 2014 ending December 31, 2013, the company is targeting GAAP revenue in a range of $140 million to $155 million with non-GAAP revenue in a range of $145 million to $160 million. GAAP gross margin is targeted in a range of 47% to 48% and non-GAAP gross margin targeted to be 54% to 56%. Operating expenses are targeted to be between $75 and $81 million on a GAAP basis and $65 million to $71 million on a non-GAAP basis. GAAP net loss is targeted to be between $6 million to $8 million, or $0.06 to $0.09 per diluted share. Non-GAAP net income is targeted in a range of $13 million to $16 million, or $0.14 to $0.16 per diluted share. The GAAP and non-GAAP net income targets are based on an estimated 96 million +/- diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to stock-based compensation expense, the amortization of acquired intangibles, acquisition related expenses and the step-up value of the acquired inventory and the purchase accounting value related to deferred service revenue.
Acquisition Activity
SAN JOSE, Calif. Nov. 1, 2013 /PRNewswire / -- Extreme Networks, Inc. (NASDAQ: EXTR) today announced that it has completed the acquisition of Enterasys Networks. The combined company immediately becomes a networking industry leader with more than 12,000 customers. Extreme Networks will set the standard for the networking industry with a strategic focus on three principles:
Highly scaled and differentiated products and solutions : Extreme Networks will significantly increase R&D to accelerate the vision for high-performance, modular, open networking. The combined portfolio spans data center networking, switching and routing, Software-Defined Networking (SDN), wired and wireless LAN access, network management and security. The broader solutions portfolio can be leveraged to better serve existing and new customers. Extreme Networks will continue to enhance and support the product roadmaps of both companies going forward to protect the investments of customers and avoid any disruption to their businesses.
Best-in-class customer service and support: Extreme Networks will augment the current outsourced support model by adopting Enterasys' in-sourced expertise, continuing the award-winning heritage and strong commitment to exceptional customer experience. The Company's expanded global network of channel partners and distributors will benefit from more services and support capabilities.
Strong Channels and Strategic Partners: Extreme Networks' focus will be to expand existing partnerships with Lenovo and Ericsson as well as continue to add new strategic partnerships in the future. Additionally, Extreme will increase its focus on partnering with distributors and channel partners globally. The goal will be to develop and enhance relationships that grow revenue and profits for the company and our alliance and channel partners. At the same time, we are investing in infrastructure to make it as easy as possible to do business with Extreme Networks.
Extreme Networks expects to double its revenue, to over $600M annually, and is now the fourth largest Ethernet networking vendor. 1
"We are committed to preserve and enhance our customers' investments and existing portfolio lifecycles. Our vision is to provide superior products and services to our customers and lead the industry with networking solutions that allow IT organizations to accelerate business growth and efficiency," said Chuck Berger
"I am thrilled that we are combining with Extreme Networks. We now have the scale to execute on many fronts, and broaden our market reach. Our networking innovation will deliver the highest level of customer value. With our global footprint, broadened portfolio, highly skilled talent and customer-centric culture, we are well positioned to set the standard for the best customer experience," said Chris Crowell
"Mobile, Social, Cloud, Big Data and the application economy are changing the landscape of business," said Vala Afshar
