Brocade Busts Out Q4 Numbers

The future's so bright, we have to wear Fibre Channel shades. And our last fiscal year wasn't too bad either.

That rough paraphrasing was the upshot from Brocade executives on last night's earnings call, in which the bellwether storage vendor posted quarterly revenue of $340 million, up 63 percent from the same period a year ago. Annual revenue for 2007 was more than $1.2 billion, up 65 percent from its last fiscal year. Earnings also beat estimates by $0.03 a share.

Brocade said it had a record quarter for its director products family, and added new interoperability to its 48k director, and pushed performance levels to accommodate the emerging 8-Gbit Fibre Channel market. IBM and HDS also agreed to resell its StorageX File Virtualization products.

Industry analyst Kaushik Roy, research analyst for datacenter technologies at Pacific Growth Equities LLC in San Francisco, pointed out that overall product revenue grew only 1 percent, in contrast to 11 percent last year."If directors and switches grew well sequentially, some other products must have declined (or at least not grown)," in this latest quarter, he wrote in an email today. "I am not clear [on] what exactly is going on there or why product revenues grew only 1 percent in a seasonally strong quarter."

While acknowledging current economic turmoil -- layoffs and industry consolidation, particularly in the financial services sector -- CEO Michael Klayko downplayed the effects on storage customers' willingness to spend, in contrast to gloomier comments from Cisco and IBM, among others.

"Frankly, we are pretty balanced. We are fairly balanced geography-wise, we're fairly balanced in industry," Klayko said on last night's call. "Different industries have different purchasing cycles that they are on and we just happen to be fortunate enough to participate with most of them."

The vendor also touted its Data Center Fabric and its DCX switch, which in Babel-like fashion will handle traffic based on Fibre Channel, FCOE, Ethernet, and iSCSI, but is not intended to replace the McData i10K and the 6140 directors acquired when Brocade bought McData.

It also gave Klayko an opening to remind investors and customers that FCOE is still based on Fibre Channel, "which is good for us." He added that Brocade has been active in the standards writing process, and dismissed any creeping threat from Cisco, QLogic, and NetApp in FCOE any time soon. Most customers won't be looking at this till 2009 or 2010, Klayko said.In fact, Cisco's growth in the SAN market -- at Brocade's expense -- appears to have been permanently blunted, given that Cisco's ability to woo McData customers away from Brocade, post-merger, has run its course. "Going forward we expect Ciscos rate of share gain in the SAN business to slow down further," Roy wrote in an investment note today.

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