Feeds

Brocade loses $63.1m on record revenues

Foundry included

Next gen security for virtualised datacentres

Storage networking vendor Brocade announced record half billion dollar plus revenues for its second fiscal 2009 quarter but nonetheless made a $63.1m loss. Analyst revenue expectations were comfortably exceeded.

Revenues were $506.3m, up 43 per cent on the year-ago quarter, which is very gratifying, and 17 per cent higher than the previous quarter, which - in the middle of the recession - is almost startling. It was the first full quarter combining results from Brocade and the acquired Foundry Network. The data storage revenues were 58 percent of the total, $294m, with Foundry IP-based revenues being 24 per cent and services revenues 17 per cent. These data storage revenues were just $8m higher than a year ago. The big boost in the revenue number came from the Foundry IP networking products.

Data storage spending has slumped in the recession with NetApp the latest company to report lowered revenues. Why has Brocade managed to sell more product than ever before and yet still make a loss? The loss is easy, analysts blaming it on Foundry acquisition costs, stock compensation, and write-downs. Legal fees for example were $19.8m, up from the year-ago figure of $4.8m. There was also a $53m goodwill write-down.

The increased storage revenue number is harder to figure. Stifel Nicolaus analyst Aaron Rakers calculates Brocade has won significant stage networking market share from Cisco in the quarter, possibly as much as 10 percent, as Cisco's storage revenues slumped, possibly due to it transferring focus from the older MDS products towards the newer Nexus, FCoE-focussed ones. Fibre Channel over Ethernet is still in the experimental stage and so sales are being held back. In effect, Brocade got a bigger share of the storage networking business in the quarter because Cisco's eyes were off the ball.

On the HBA (Host Bus Adapter) front Rakers thinks Brocade revenues rose to around $5m, up from the previous quarter's $2m. Brocade signalled another OEM qualification is coming. EMC and IBM having already been announced. HP is probable. Dell has become an OEM for the Foundry products, and it is thought that HP may follow suit. Both moves seen in the context of Cisco entering the server business.

Brocade indicated that the next quarter's revenue number will be the same as Q2 or down by 2 per cent. ®

The essential guide to IT transformation

More from The Register

next story
The Return of BSOD: Does ANYONE trust Microsoft patches?
Sysadmins, you're either fighting fires or seen as incompetents now
Microsoft: Azure isn't ready for biz-critical apps … yet
Microsoft will move its own IT to the cloud to avoid $200m server bill
Oracle reveals 32-core, 10 BEEELLION-transistor SPARC M7
New chip scales to 1024 cores, 8192 threads 64 TB RAM, at speeds over 3.6GHz
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
Object storage bods Exablox: RAID is dead, baby. RAID is dead
Bring your own disks to its object appliances
VMware vaporises vCHS hybrid cloud service
AnD yEt mOre cRazy cAps to dEal wIth
prev story

Whitepapers

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.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?