Brocade Busts Out Big Numbers

Boosted by sales of DCX and its 8-Gbit/s switch offerings, Brocade posted Q3 revenues of $365.7 million this morning, a 12 percent hike on the same period last year and well above analyst estimates of $351.7 million.

Q3 was an outstanding quarter as Brocade returned to double-digit growth,” said the company’s CEO Mike Klayko during a conference call this morning. “We firmly expect the DCX backbone will continue to ramp [and] our record switch business was driven by strong demand for our 4-Gig and 8-Gig switches.”

Brocade does not break out specific product revenues, although the DCX directors, which were launched earlier this year, already account for almost a third of the vendor’s high-end director business.

The vendor reported earnings of 5 cents per share on $20.7 million, up from 3 cents and $10.7 million in the same period last year. On a non-GAAP basis, Brocade reported earnings of 16 cents on $61.2 million, compared to 12 cents and $49.5 million in the third quarter of 2007. Analysts had estimated non-GAAP EPS of 14 cents.

Brocade was widely expected to continue the current run of solid financials from key storage vendors such as EMC, HP, and IBM.”In Q3 we had an excellent quarter financially, bucking seasonal trends,” explained Richard Deranleau, the Brocade CFO, adding that the vendor saw no spending slowdown. “North America had a very good quarter, [the] financial sector was very strong -- that we hadn’t anticipated, [and] all the verticals were strong.”

Today’s results largely confirm that Brocade is pulling market share away from Cisco, which experienced a 14 percent year-over year drop in storage revenues in its most recent results.

The Brocade CEO nonetheless side-stepped this issue when Pacific Growth Equities analyst Kaushik Roy quizzed him about Cisco during this morning’s call.

”It’s obvious that they lost a lot of share,” said the analyst. “Probably [their] lack of 8-Gig hit them and helped you.”

With market share figures soon to be released, Klayko’s response erred on the side of caution, and the CEO appeared unwilling to put the knife into Cisco.”When I talk to end users, they are really resonating with our story and our architecture,” he replied somewhat vaguely. “At this point in time, and for the foreseeable future, we have the best switches in the marketplace.”

The vendor, which recently threw down a whopping $3 billion for Foundry Networks, was also coy about its long-term plans for the router specialist’s technology.

Additional details on the Foundry roadmap will be provided during the vendor’s analyst day next month, according to execs on this morning’s call.

Brocade was a little more forthcoming on its financial plans, issuing its Q4 guidance this morning. The vendor revenues between $375 million and $385 million, and GAAP EPS of between 15 and 16 cents.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.