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

3 Big data security analytics techniques

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
Number crunching suggests Yahoo! US is worth less than nothing
China and Japan holdings worth more than entire company
prev story

Whitepapers

SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.