Brocade Sees Mixed IP Networking Sales

Strong switch and enterprise customers sales offset declining router, service provider, and US federal sales.

Mitch Wagner, Executive Editor, Light Reading

February 17, 2016

2 Min Read
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.


— 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].

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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