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Ethernet sales slump punches Brocade in the wallet

Business not so good

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Ethernet sales slumped a bit and caused Brocade's second 2012 quarter results to stumble.

Its fiscal Q2 revenues were $543.4m, down 3 per cent sequentially and 1 per cent annually. Half a billion dollars plus revenue is nothing to sneeze at – startups would kill to be in this territory – but it's disappointing if you are Brocade and hungry to become a billion dollar a year corporation.

Brocade results to Q2 fy2012

Profits looked poor as well, at $39m. That was well up on the year-ago quarter's $26m but $20m shy of last quarter's $59m – ouch!

Fibre Channel was okay, down seasonally but okay, with 16Gbit/s product taking the biggest share of sales. Why Cisco isn't doing better here is a standing question. Possibly it has 16 gig FC macular degeneration in its strategic eye. All Brocade can do is say: "Thank you Uncle John," and hope it continues.

Brocade's Ethernet business was down 10 per cent on an annual compare, with Brocade saying Uncle Sam's federal business was a significant cause of that, being down 12 per cent year-on-year and 20 per cent compared to the previous quarter. The company is repurchasing shares to keep investors sweet.

CEO Mike Klayko issued reassuring words about the results: "The Company remains diligent in its efforts to refine and enhance its strategies to appropriately evolve the business while driving growth and consistent profitability." Bet he was a lot less calm and reassuring in private. Brocade's quarterly results have been essentially flat for six quarters in a row and profits have been patchy. Come on Brocade, get your company motoring; Fibre Channel isn't going to last for ever. ®

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