Storage Sells: Brocade Defies Downturn
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Brocade (NASDAQ: BRCD) posted strong quarterly results on Tuesday, evidence that storage spending continues to hold strong in the face of an economic downturn.
Just about every aspect of the storage switch market leader's product lineup held up well in its July quarter, including 4 Gbps and 8 Gbps Fibre Channel switches, director-class switches, embedded switches for blade servers and services, with embedded switches and services both posting 40 percent year-over-year revenue growth in the quarter.
"We really hit on all cylinders," said Ian Whiting, vice president and general manager of Brocade's Data Center Infrastructure Division.
Whiting said he believes the company took share from storage switch rival Cisco Systems (NASDAQ: CSCO) "across the board."
Brocade's storage switch revenues grew 12 percent sequentially in the quarter, and up 5 percent from the year-ago quarter. Its director sales were up only 3 percent from a year ago, but the company said that was a strong performance for a seasonally weak quarter.
Brocade and Cisco will become even closer competitors in the months ahead, as Brocade completes its acquisition of Foundry Networks (NASDAQ: FDRY). Brocade will reveal more of its plans for Foundry at its September 17 analyst day.
Whiting said Brocade's DCX director introduced in January already comprises 30 percent of the company's enterprise business, an "unprecedented" level of adoption for a new product, as the company and Cisco position themselves for next-generation converged networks. (See Brocade Takes the Lead.)
Whiting also noted that while still in the OEM qualification process, Brocade's new HBA lineup has also met with initial enthusiasm.
Brocade reported 12 percent year-over-year sales growth in the quarter to $365.7 million, well ahead of analysts' estimates, and its non-GAAP earnings of 16 cents a share were two cents better than the Thomson Financial consensus forecast.
Brocade said financial services industry sales were better than expected despite the year-long credit crunch crippling the industry, and the company forecast better than expected sales for the current quarter.
In midday trading, Brocade shares were up 2 percent, compared to a greater than 1 percent decline for the broader market.