Feeds

Investors bury Brocade on dismal Q3

4Gbit hell

  • alert
  • submit to reddit

Top three mobile application threats

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

Application security programs and practises

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Microsoft: We're making ONE TRUE WINDOWS to rule us all
Enterprise, Windows still power firm's shaky money-maker
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.