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Data Center Infrastructure

Brocade Sees Mixed IP Networking Sales

Brocade on Wednesday reported mixed IP networking sales in the first quarter 2016, with strong switch and enterprise sales offsetting declining router, service provider and US federal sales.

IP networking product revenue was within Brocade Communications Systems Inc. (Nasdaq: BRCD)'s outlook range at $134 million, up 1% year-over-year, for the quarter ending Jan. 30. Growth was primarily due to stronger switch sales, up 19%, offset by weaker router sales, down 25% Increased revenue year-over-year was primarily from enterprise customers, as revenue from service providers and US federal customers was down from the year-ago quarter.

IP networking product revenue declined sequentially 21%, due to lower Ethernet switch and routing revenues, down 22% and 19% respectively.

"This sequential decrease was primarily due to a more pronounced U.S. federal seasonal decline and lower router sales to service provider customers," Brocade said in its earnings statement. (See Brocade Reports $574M 1Q 2016 Revenue.)

Overall, Brocade reported first quarter revenue of $574 million, flat year-over-year and down 2% sequentially. Non-GAAP diluted earnings per share was $0.29, up from $0.27 year-over-year and $0.26 sequentially.

Brocade traded at $9.15 up 7.39% after hours Wednesday.

SAN product revenue was $347 million, above outlook range but down 2% year-over-year, primarily as a result of software demand for embedded and fixed configuration Fibre Channel switches, Brocade said.

In the second quarter, Brocade expects IP networking product revenue to be up 3% to 9% sequentially, as its IP networking business is traditionally stronger in the second quarter. Revenue will be $542 million to $562 million, with non-GAAP EPS of $0.22 to $02.4.

In its earnings statement, Brocade noted new mobility products, introduced this week, to help carriers build New IP networks to support new services and business models for 5G adoption. Brocade expects the introduction to open a new worldwide market. (See Brocade: 5G Is More Than Just an Air Interface.)

Brocade's board declared a quarterly cash dividend of $0.045 per share of the company's common stock, to be made April 4 to stockholders of record as of March 10.

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— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

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