Brocade reported second quarter revenue of $523m, down 4 per cent year-over-year from $547m, and a 9 per cent quarter-over-quarter decline from $574m, as general storage networking sales weakness impacted its results.
- SAN product revenue of $297mn was down 5 per cent year-over-year
- Fibre Channel directors down 6 per cent
- Fixed-configuration switches down 4 per cent
- Embedded server switches down 9 per cent
- Sequentially, SAN product revenue decreased 15 per cent
- Fibre Channel directors declining 12 per cent
- Fixed-configuration switches down 14 per cent
- Embedded server switches down 25 per cent
The q-on-q decline was larger than expected mostly because of unusually weak storage demand as reported by many of Brocade's partners and peers.
The IP networking area did somewhat better, with product revenue of $132m down 9 per cent year-over-year, mostly due to lower router sales, down 33 per cent, into weak service provider and U.S. federal sales markets. This was partially offset by stronger Ethernet switch sales, up 9 per cent.
The sequential IP networking pattern was different, with product revenue decreasing just 2 per cent, primarily because of lower Ethernet switch sales, down 3 per cent, to enterprise customers as both service provider and U.S. federal revenue grew sequentially.
CEO Lloyd Carney talked about a challenging environment and looked to the future: "We continue to drive the strategic evolution of our business as a pure-play networking provider for the digital transformation era. Additionally, we expect our product roadmap to deliver further advancements across our portfolio that set the stage for expanded opportunities in the quarters to come."
Despite the lower revenue, Carney's tightly run ship produced a profit, with net income being $43m, down more than 50 per cent sequentially from $94m and 44 per cent less than the year-ago's $77m, but a decent profit nonetheless.
There's the completion of the Ruckus wireless acquisition to look forward to in the third quarter, and investors got an increased dividend. However third quarter revenue is expected to be between $510m and $530m, $520m at the mid-point; it was $552m a year ago. That implies FC SAN revenues are not going to grow any time soon, and nor are IP networking sales going to grow either.
For now Brocade is stuck, chewing the networking cud, and looking forward to a wireless-driven boost. ®