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Brocade Shares Slide on Weak Ethernet Sales

Brocade shares took a nosedive Tuesday after the storage networking switch leader reported a 26 percent decline in its Ethernet networking sales. Enterprise Storage Forum takes a closer look at the numbers and compares the sluggish results to those of other network-equipment makers.


Shares of Brocade (NASDAQ: BRCD) lost nearly a quarter of their value today after the storage networking switch leader posted unexpectedly weak sales in its Ethernet business acquired from Foundry a little more than a year ago.

Brocade's Ethernet networking sales were down 26 percent, significantly worse than the recent performance of rivals Cisco (NASDAQ: CSCO), Juniper (NASDAQ: JNPR) and HP (NYSE: HPQ). The company blamed weak government sales and a faulty OEM sales model.

"We are frustrated with Brocade's results, not just Government Ethernet switching, but also the clear market share losses in enterprise and persistent declines in service provider Ethernet switching, as well as what we consider a lack of definitive color with the company's strategic direction toward a recovery going forward," Aaron Rakers, an analyst at Stifel Nicolaus, wrote in a research note this morning.

Brocade's nascent HBA and CNA business was flat, Rakers noted, "reflecting ongoing limited traction."

The one strong area of Brocade's earnings report was Fibre Channel storage area network (SAN) sales, which rose 16 percent from the previous quarter, much stronger than Cisco's recent flat showing.

Wedbush analyst Kaushik Roy called Brocade's data storage sales "super strong."

Read the full story at Enterprise Storage Forum:
Brocade Plunges on Weak Networking Sales