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Brocade Rises on Healthy Sales: Page 2 of 3

Brocade execs did not attribute sales gains last quarter to customers moving away from McData because of the impending acquisition. Marketing VP Tom Buiocchi said there was still "healthy competition out there" between the two companies. "We've had competitive takeouts of the competition for quarters and quarters and quarters on end," he said. "I'm not sure there are any major differences there."

CEO Mike Klayko characterized it as "normal business as usual out there," and said Brocade and McData are operating as independent competing companies while putting together an integration team with members from both companies to insure a smooth transition.

One Wall Street analyst drew a connection between Brocades year over year gain and McData’s decrease.

In a research note, Mark Kelleher of Canaccord Adams wrote Brocade benefited from its early advantage in 4-Gbit/s switches as well as improved storage sales through EMC, Heweltt-Packard, and IBM but also pointed out: “Brocade’s out-performance in the quarter is nearly perfectly matched with McData’s underperformance. While we believe this trend was well under way before the merger announcement, we believe it has accelerated as customers view Brocade products as the more likely surviving platforms.”

Klayko said Brocade's fabric switch revenues grew 53 percent year over year and 19 percent sequentially, and director revenues grew 25 percent year over year and 2 percent from the previous quarter. Klayko characterized the industry director market as "flat to slightly down" sequentially last quarter.