Street-beating Brocade bounces back

Third quarter revenue rise and profits add shine to its switches

Beginner's guide to SSL certificates

Storage networking biz Brocade has bounced back from its disappointing and loss-making second quarter results with third quarter profits and a revenue rise.

The quarter finished on 2 August and revenues of $545m were 2 per cent up on the previous quarter and the year-ago one – not dramatic but nice and steady. Net income (profit) was $87m, 16 per cent of revenues; much better than the $14m loss in the previous quarter but 27 per cent less than a year ago when revenues were $537m.

CEO Lloyd Carney called it a solid quarter. SAN business revenue, including switch and director products and services, was $380m, up 3 per cent year-over-year and flat sequentially. The switch to 16Gbit/s Fibre Channel helped here.

IP Networking product revenue was $133m, down 1 per cent year-over-year and up 9 per cent sequentially. Ethernet switch revenue increased 17 per cent year-over-year and 27 per cent sequentially. Routing product revenue decreased 19 per cent year-over-year and 20 per cent sequentially, primarily due to a pause in some customer orders in anticipation of new products scheduled for release in the next quarter.

Stifel Nicolaus MD Aaron Rakers anticipates new 10/100GbE MLX blades coming then together with new routers.

William Blair analyst Jason Ader noted: "IP came in at the low end of guidance and registered a year-over-year decline for the fifth consecutive quarter."

He summed the quarter up like this: "Strong quarter but cost-cutting thesis looks played out with little growth in sight." He said he expects "Fibre Channel to be a shrinking market over the next several years. In addition, we believe Brocade continues to benefit from QLogic's exit from the Fibre Channel switching business, though this represents a temporary share-gain tailwind."

Brocade expects next quarter's revenues to be between $550m and $570m, a slight year-on-year rise at the mid-point. This expectation is lower than it would otherwise have been on two counts; uncertainty due to the IBM-Lenovo X86 server transition and the geo-political situation concerning Russia and Ukraine.

Adair is quite blunt about Brocade: "Ultimately, the company remains a cost-cutting cash cow story — until proven otherwise." ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
'Internet Freedom Panel' to keep web overlord ICANN out of Russian hands – new proposal
Come back with our internet! cries Republican drawing up bill
What a Mesa: Apple vows to re-use titsup GT sapphire glass plant
Commits to American manufacturing ... of secret tech
prev story


Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Driving business with continuous operational intelligence
Introducing an innovative approach offered by ExtraHop for producing continuous operational intelligence.
Why CIOs should rethink endpoint data protection in the age of mobility
Assessing trends in data protection, specifically with respect to mobile devices, BYOD, and remote employees.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.