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Brocade makes hay before McData integration

Bitter pill to swallow?

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Storage switch specialist Brocade posted a strong set of quarterly results as it prepares to near-double its market share by integrating recently completed acquisition McData.

For the three months to January 27, Brocade revenues were $224.2m, up 32 per cent on the same period a year earlier. Margins widened too, with the record sales netting a GAAP profit of $33.3m, or $0.12 per share, walloping Q1 2006's $9.7m, or $0.04 per share, by 245 per cent.

Brocade's customer profile hasn't changed; it was dependent on its three big OEM partners HP, IBM and EMC for 72 per cent of the revenues. This inevitably leaves it vulnerable to the winds of changes in the broader market, but for know - as we saw with HP's most recent quarter - things are pretty rosy for the storage switch supplier.

Cisco's burgeoning switch business is looking strong too though. As the only two remaining big players in the market, there should be more clues as to how the tussle between the two will shake down when Brocade digests its swallow of third wheel rival McData next quarter. McData's flagging numbers, which were missing their targets in its final days as a standalone entity, might take the shine off for Brocade for a while.

This quarter's biggest deal - the acquisition of iSCSI chip maker Silverback Systems - had no impact on Brocade's bottom line. It ended the period with more than $630m cash at hand.

Brocade CEO Michael Klayko said: "It's an exciting time for Brocade and an exciting time for the industry." Shares in his firm were up more than four per cent on Tuesday morning. ®

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