McData Revenues Rise

The third shoe dropped in the Fibre Channel switch market today, as McData reported a redemptive quarter after close of business.

McData reported fourth-quarter net revenues for the period ended January 31, 2006, of $181.8 million, up 8 percent compared to $168.5 million year-on-year. Full-year 2005 net revenues were $614.4 million, up from $399.7 million for full-year 2004. (See McData Reports Earnings and McData Struggles to Keep Pace.)

McData ended the year with nearly 54 percent more revenues than last year. And the quarterly results were substantially better than last quarter, when McData reported net losses of 5 cents per share and $7.5 million. (See McData's Mixed Bag.)

"I'm very pleased with our results this quarter, representing record revenue for McData," said CEO John Kelley.

McData execs claim strong sales across the board accounted for the improved picture. Sales of Fibre Channel directors in particular rose "by low double digits" sequentially, they claim; fabric switch sales were flat, and SAN routers were up year-on-year, though sales were down sequentially.Execs said supply chain woes suffered by the i10K have been solved, and that the company is basing high hopes on the product. They claim there's strong demand for the 10-Gbit/s capability on the director.

The report in part answers questions about who ate Cisco's lunch last quarter. (See Cisco Reports Q1 and Cisco Distracted?) Still, whatever business McData won, it shared with Brocade, which remains the dominant competitor in the Fibre Channel switch market -- and McData's most formidable foe.

Brocade reported fourth-quarter revenues of $145.5 million, down from $155.6 million in the same period last year. For the full year, the firm reported annual revenues of $574.1 million, down from $596.3 million in 2004. (See Brocade: Tough Quarter, Bad Year.)

Cisco disclosed that its storage revenue rose 9 percent year-over-year, giving Wall Street analysts enough insight to realize this represented a steep decline from the previous quarter. A decline in a quarter where storage systems partners EMC, Hitachi Data Systems, and IBM all reported double-digit sequential growth suggests that Cisco lost share to Brocade and McData.

Clearly, the war of the Fibre Channel directors has narrowed to two key competitors, though this situation may not persist. Cisco's 4-Gbit/s director hasn't materialized, but when it does, that could shift the balance of power once again. (See Cisco 4-Gbit Director MIA.)Mary Jander, Site Editor, Byte and Switch

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