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Brocade Hits Estimates, Lays Off 110

While reporting revenues slightly above expectations, Brocade Communications Systems Inc. (Nasdaq: BRCD)
today dropped in news of a major staff reduction (see Brocade Announces Earnings ).

Brocade reported revenue of $145.6 million, compared to First Call consensus estimates of $145 million. Its earnings of $0.03 per share met First Calls forecast. Brocade’s revenue was up 11 percent from last year, and its earnings of $8.1 million were up from a loss of $1.1 million last year.

The switchmaker said it would reduce its staff by 110 employees, or 9 percent of the company, however, in what CEO Greg Reyes called an “organizational alignment.” Part of the move includes consolidation of Brocade's OEM and end user/channel sales team into one, moving manufacturing to China, and outsourcing some research and development to India.

Forty of the employees involved in this layoff were let go earlier in the quarter, with the rest laid off today. Although there had been rumors of a major layoff at Brocade in recent weeks, a company spokeswoman last week told Byte and Switch that none were planned. [Ed. note: but did you ask them about “organizational alignments”?] Sources say more staff cuts are coming.

"This is not a reoccurring pattern," Reyes said in a conference call with analysts, although it is at least the fourth Brocade layoff since November of 2002 (see Brocade Shaves Heads, Brocade Chops More Heads and Brocade Cleans House).

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