Brocade Undone By Pricing Pressure

Shares of Brocade tumbled 17% Friday after reporting results that were down from last year.

The results were in line with expectations – but investors were hoping for more because Brocade’s aggressive pricing in the quarter was expected to steal business away from storage switch leader McData .

McData was forced to concede on prices with EMC , its largest customer, after Brocade gave EMC lower prices, but it appears that Brocade gained little from the ploy – except for lower margins.

With QLogic recently moving into the SAN switch space, competition is only expected to get tougher. And that could continue to pressure shares of Brocade and McData.

Stocks posted modest gains Friday, but the rally was restrained after Al Qaeda said it plans major attacks by February. Merck’s latest troubles weighed on drug stocks.

The Nasdaq climbed 11 to 1893, the S&P 500 added 1 to 1035, and the Dow rose 9 to 9628. Volume declined to 1.26 billion shares on the NYSE, and 1.62 billion on the Nasdaq. Advancers led 19-12 on the NYSE, and 17-14 on the Nasdaq. Upside volume was 58% on the NYSE, and 57% on the Nasdaq. New highs-new lows were 122-11 on the NYSE, and 120-19 on the Nasdaq.

AutoDesk and Microsemi rose after beating estimates, but the day was otherwise a disappointing one for companies reporting results.

Portal Software , Serena , Agile , TiVo , Novell and CNT all fell on their earnings reports.

Yahoo climbed 2% on plans to enter the Asian domain name market.

Quantum rose 6% on an upgrade.

Qwest was unchanged on plans to buy assets of Allegiance Telecom out of bankruptcy.

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