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Ethernet equipment

Storage Woes Tug at Brocade's Q2

Brocade Communications Systems Inc. saw slightly reduced revenues for the fiscal second quarter, but lower expenses helped to spike net income by 20 percent. Citing a "challenging environment" for storage, the maker of networking equipment reported Thursday that storage-related product revenue fell 7 percent compared to the year-earlier period. (SAN revenues fell 12 percent from a record figure in the fiscal first quarter.) Among other factors, federal sales were soft, as other IT and networking companies have been reporting. (See Cisco Could Be Hit by Weaker US Govt. Spending.) IP networking product revenues were down 6 percent from the fiscal first quarter, but thanks partly to continuing growth in campus LAN sales, they were up 17 percent year-over-year. "We believe that the fundamentals of the SAN market are strong," CEO Lloyd Carney said in a prepared statement. The company is particularly pleased with the ramp of its 16Gbit/s Gen 5 Fiber Channel product line introduced 21 months ago. It now provides more than half of the firm’s director and switch revenue. Carney, named CEO four months ago, said Brocade had doubled its customer base -- to 1,100 -- for its VDX Ethernet switch during the past year. Brocade reported second-quarter revenues of US$539 million (versus the $550 million analysts had been expecting) and non-GAAP earnings of 17 cents per share (analysts had been expecting 15 cents). Non-GAAP operating margin for the quarter was 65.1 percent, up from 64.8 percent a year earlier. The company had planned on discussing its earnings with Light Reading late Thursday but cancelled. A spokeswoman said the company had cancelled all such calls with the press, so we'll try not to take it personally. — John Verity, contributing editor, special to Light Reading
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