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McData Still Waiting for Upswing

More than halfway through 2005, McData Corp. (Nasdaq: MCDTA) is still waiting to get the big boost from new products it counted on at the start of the year (see McData's Ready for Rollout and McData Goes on Offensive).

Overall, McData performed well in its second quarter, compared to the competition (see McData Reports Q2). Its $165.3 million in revenue and $0.03 earnings per share were higher than analysts expectations. Analysts expected $160 million and $0.01, according to Thomson First Call.

A closer look shows much of McData’s gains came from revenue from products it acquired by purchasing CNT in June (see McData Bags CNT for $235M). Factoring in combined revenue from both companies compared to previous quarters, McData’s revenue was about flat sequentially and up around 3 to 4 percent from last year.

That still puts it ahead of Brocade Communications Systems Inc. (Nasdaq: BRCD), which reported a 16 percent sequential drop and 19 percent year-over-year drop in revenue for last quarter. McData’s other main rival, Cisco Systems Inc. (Nasdaq: CSCO), also reported a sequential decline in Fibre Channel switch revenue recently.

McData CEO John Kelley estimates his company gained market share in the director space with sales of its i10K last quarter, but admits sales of the new director won’t fulfill expectations until top customer EMC Corp. (NYSE: EMC) qualifies and OEMs it (see McData Announces Intrepid i10K and McData Cuts & Shuffles).

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