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Free-spending Brocade dinged in Q1

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Brocade's profits took a beating during its first fiscal quarter of 2008, as the company's legal fees and lossy investments gave revenues a once-over.

The storage switch maker's GAAP net income dropped 40 per cent to $19.8m from $33.3m in the same period last year. Brocade attributed the slump to one-time operating expenses, such as $9.66m paid in legal fee obligations to its previous employees. (Two former top executives were recently convicted of conspiring in an illegal stock option backdating scheme.) Other expenses include $2.2m from investment losses. Total operating expenses rose to $151.3m from $101.9m year-over-year.

In the theoretical non-GAAP universe where these costs never existed, net income would have been $64.2m, a 30 per cent increase from $49.4m a year ago.

Revenue jumped 55 percent to $347.85m from $224.16m year-over-year. But keep in mind any number prior to Q2 2007 doesn't include earnings from McData.

OEM sales accounted for 88 per cent of revenue for the quarter. Channel/Direct sales were 12 per cent of revenue. The company's top three customers, EMC, Hewlett-Packard, and IBM accounted for two-thirds of the total revenue.

Brocade's biggest announcement during the quarter was the DCX Backbone, a massive 8Gb/s Fibre Channel switch that the company says will be the cornerstone of its new generation of data center gear. ®

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