For its third quarter, which ended July 30, Brocade expects revenues to be $500 million to $505 million, compared with its previous forecast of $540 million to $560 million.
Ethernet sales will actually grow 12 to 13 percent over last year's third quarter, but Brocade had expected more. And storage revenues, representing about two-thirds of Brocade's business, will be down 5 to 6 percent compared with a year ago.
Brocade's share price had fallen 7.6 percent on Thursday, the day when pretty much every stock fell. You have to wonder if some Brocade investor somewhere said, "Hey, it could be worse!"
Why this matters
It's not just that Brocade missed numbers; it's that the company is reporting weak demand in IT, from government customers in particular. That reinforces the hints coming out of other equipment vendors and adds to the pall that's building over this industry.
Last week, Extreme Networks Inc. (Nasdaq: EXTR) reported that Ethernet could be facing fierce pricing battles. And Juniper Networks Inc. (NYSE: JNPR) lowered its sales forecasts based on the downtrodden economy and an expected leveling-off of service-provider business.
It's just tough all around, and none of that bodes well for the most closely watched equipment vendor, Cisco Systems Inc. (Nasdaq: CSCO), which announces its earnings on Aug. 10. Odds of any happy surprises there just got even lower.
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— Craig Matsumoto, West Coast Editor, Light Reading