Blue Coat Systems Earnings Preview

Investors hope Blue Coat Systems (Nasdaq: BCSI  ) will top analyst estimates once again after beating predictions by $0.07 in the previous quarter. The company will unveil its latest earnings on Wednesday, Feb. 15. Blue Coat Systems designs, develops, and sells products and services that secure and optimize the delivery of business applications and other information to distributed users over a wide area network or the public Internet.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Blue Coat Systems with analysts unanimously rating it hold. Analysts don't like Blue Coat Systems as much as competitor NetScout Systems overall. Five out of 12 analysts rate NetScout Systems a buy compared to zero of 12 for Blue Coat Systems.
• Revenue forecasts: On average, analysts predict $116.5 million in revenue this quarter. That would represent a decline of 5.2% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.17 per share. Estimates range from $0.16 to $0.18.

What our community says:
CAPS All-Stars are solidly backing the stock, with 94% assigning it an "outperform" rating. The greater community concurs with the All-Stars, as 92% give it a rating of "outperform." Fools are gung-ho about Blue Coat Systems and haven't been shy with their opinions lately, logging 144 posts in the past 30 days. Blue Coat Systems' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Blue Coat Systems' income has fallen year-over-year by an average of 32.4% over the past five quarters. Revenue has fallen for the past three quarters. The company's gross margin shrank by 2.2 percentage points in the last quarter. Revenue fell 5.8% while cost of sales rose 3.7% to $27 million from a year earlier.

Now, a look at how efficient management has been at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. Blue Coat Systems' net margins, which reflect what percentage of revenue becomes profit, have dropped year over year for the last three quarters. See how Blue Coat Systems has been doing for the last four quarters:

Quarter	Q2	Q1	Q4	Q3
Gross Margin	76.4%	76.2%	77.8%	77.8%
Operating Margin	6.5%	4.3%	12.0%	12.5%
Net Margin	4.0%	2.5%	7.5%	9.8%

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Earnings estimates provided by Zacks.