Feeds

Investors bury Brocade on dismal Q3

4Gbit hell

  • alert
  • submit to reddit

Business security measures using SSL

Shares of storage switch maker Brocade were pounded this week after a troubling third quarter revenue drop rattled investors' nerves.

Brocade revealed preliminary third quarter results of revenue between $121m and $122m. That's a shocking miss from a previous forecast issued in May of revenue between $140m and $145m. Investors dropped Brocade from around $4.60 per share to less than $4 per share on the news. During today's trading, Brocade shares crept back to $4.03.

Management blamed higher than expected interest in new 4Gbit products instead of 2Gbit kit for falling gross margins, slow overall sales and inventory buildup.

"While we are pleased that end-user demand for our new 4Gbit family has been much stronger than we expected, this has affected our 2Gbit switches and directors," said Michael Klayko, CEO at Brocade. "It is clear that customers recognize the value proposition of 4Gbit and we are encouraged by the progress that we are making with this transition. While the impact on the director business this quarter is disappointing, I am confident that our business is positioned to accelerate through the transition and positively affect top line growth beginning in the fourth quarter. We continue to expect it to take two full quarters to reduce OEM inventory levels."

Brocade, which expects to lose 3 cents to 4 cents per share during the third quarter, has suffered through a rough 2005. It has lost market share to McData and Cisco, causing two consecutive quarters of poor results. In addition, the US SEC (Securities and Exchange Commission) has started an investigation into how Brocade handled four years of stock options. ®

Related stories

Dell customers offered McData meal with their blades
Larry Ellison's storage toy goes after EMC and NetApp
US SEC shows Brocade its formal probe
Brocade to restate four years of financials as DoJ and SEC look on
Brocade blames March for Q2 shocker

Reducing the cost and complexity of web vulnerability management

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.