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Brocade Bungles Quarter

Brocade Communications Systems Inc. (Nasdaq: BRCD) says sales for last quarter fell far short of meeting the companys previous forecast. The company blames a range of factors.

Brocade’s revised forecast is for revenues of $144 million to $145 million and earnings per share (EPS) of $0.07. Brocade’s previous guidance called for revenues of $155 million to $161 million and EPS of $0.08 to $0.09. Analysts polled by Thomson First Call expected $158.7 million in revenue and $0.09 EPS. Brocade posted revenues of $145.6 million in the same quarter last year, and its revenues were $161.6 million in the previous quarter.

Brocade’s new CEO Mike Klayko attributed the poor results to greater seasonality than expected and longer sales cycles pushing deals later in the year.

"As reported recently by several industry observers, the storage environment in the last two weeks of March was weak and while April was a good month, it was not enough to offset the weakness in March. As we enter the third fiscal quarter, our sales pipeline continues to grow and the pipeline we see today is a stronger one than it was entering our second quarter," Klayko said in a statement.

Also, Cisco Systems Inc. (Nasdaq: CSCO) has been making strong gains in the Fibre Channel switch market in recent quarters. The emergence of a third major vendor along with Brocade and McData Corp. (Nasdaq: MCDTA) at least contributed to longer sales cycle if not poorer sales for Brocade.

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