Brocade Q3 sales disappoint the markets

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Brocade Q3 sales disappoint the markets

Alex Scroxton

Brocade stock has taken a mild battering today after Q3 sales at the networking and storage vendor came in below previously detailed expectations.

Sales of $504m were up 2% year-on-year - analysts had called for $508m on average - while net profits grew to $22m, reversing a year-ago loss of $23m.

Hailing a "solid quarter" CEO Mike Klayko said the firm's SAN business was doing better than expected, and the firm's Ethernet business was making progress.

"We expect a strong finish to our fiscal 2010. Despite operating in a challenging global economy with variable IT spending patterns, we are confident that our sales and marketing strategies as well as our product portfolio are aligned well with customer imperatives," he said.

In spite of Klayko's optimism, Brocade's troubles drew parallels with Cisco, which last week disappointed the markets with its own numbers.

Cisco CEO John Chambers said he believed the possibility of a double dip recession was remote, but sounded a more conservative outlook than normal, and pressed for his own view on Chambers' remarks, Klayko said he "wouldn't discount" the opinions of a large competitor.

"We have to balance what we see and what others are seeing in the market and then we have to factor that into our guidance going forward," he said.

Brocade now expects to make Q4 sales of between $530m and $550m. It also revised its full-year revenue outlook down slightly from $2.1bn to $2.07bn.

"A lot of people, in the industry, are taking a more balanced view around the world and they're calling on some macro trends. We're just taking a more balanced view around some of the industry guidelines," said Klayko.


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