Brocade profits head south on increased costs

Brocade's fourth quarter GAAP net income shrank 28% year-on-year to to $23m (£14.4m) even as sales at the network and storage vendor hit a new record of $550m, up 5%, driven by solid growth in its Ethernet business. Brocade said it had seen a rise in its sales and marketing costs, as well

Brocade's fourth quarter GAAP net income shrank 28% year-on-year to to $23m (£14.4m) even as sales at the network and storage vendor hit a new record of $550m, up 5%, driven by solid growth in its Ethernet business.

Brocade said it had seen a rise in its sales and marketing costs, as well as the impact of a one-off tax benefit booked this time last year.

However, there was positive news for the channel, as Brocade reported that service provider sales grew at over 30% during the quarter, and said it recruited 24 Elite and Premier partners to its APN (Alliance Partner Network) during the period.

The firm is now predicting sales during the first quarter of its fiscal 2011 will be flat, owing to weakness in core US markets.

"With Congress in a lame duck session right now and then coming back with a lot of change in January, there's just a lot of uncertainty there and we're very uncomfortable," said CEO Mike Klayko on a conference call.

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