NFV Elements

IP Storage Attracts Attention as Brocade Boosts Its Margins

New IP storage capabilities caught the attention of several analysts during Brocade's earnings call on Thursday afternoon.

Brocade Communications Systems Inc. (Nasdaq: BRCD) and EMC Corp. (NYSE: EMC) have just unveiled the new Connectrix VDX-6740B IP storage switch, which is designed to offer fiber channel-like functionality with virtual flexibility.

"Ease of use, security and manageability," said CEO Lloyd Carney of fiber channel on the call. "We're bringing the same kind of [capabilities] to IP storage."

Brocade says it isn't working with other vendors on IP storage yet, just filling out its VDX portfolio with its major storage OEM partner. "We're happy to get started with EMC," said Jason Nolet, senior VP of Brocade's data center switching, routing and analytics products group.

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IP-based product sales in general pumped up Brocade's results during its fiscal first quarter, which ended Jan. 31 2015. The vendor's IP networking division, which sells Ethernet switches and routers to data center operators, generated $133 million in revenue during the quarter, up 11% year-on-year.

The rump of Brocade's sales still come from storage area networking products, which generated sales of $353 million, about the same as a year earlier.

Total revenue for the quarter was $576 million, up by 2% year-on-year and quarter-on-quarter. The vendor also improved its gross and operating margins compared with the year-ago and previous quarters, as this earnings report shows, with gross margin hitting 67.6% and operating margin climbing 2.7 percentage points from a year ago to 24.2%.

Brocade reported net income of $87 million, or $0.20 per share. Non-GAAP earnings (after one-time costs) increased to $0.27 cents per share.

The financials were slightly better than Wall Street had expected. As a result, Brocade's share price edged up by 1.35% in after-hours trading to $12.75.

— Dan Jones, Mobile Editor, Light Reading

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