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McData Trails Switch Rivals

McData lagged its major competitors in the Fibre Channel switch market last quarter, declining in revenues from last quarter, for which Brocade and Cisco posted solid increases.

McData today announced earnings of $168.3 million for net income of $6.1 million or $0.04 earnings per share (EPS), down from $181.8 million, $12.6 million, and $0.08 EPS last quarter. Its revenue increased from $98.9 million in the same quarter last year -- but the year-ago number was before it completed its acquisition of rival Computer Network Technology (CNT). (See McData Completes CNT Acquisition and McData Bags CNT for $235M.)

McData's results weren't much of a surprise. The company revealed on May 5 that it expected to come in at the low end of its previous guidance of $167 million to $177 million in revenue and $0.03 to $0.05 EPS. (See McData Gives Preliminaries.) But both if its main competitors have since reported positive results.

Brocade's revenue of $182.7 million increased 26 percent from last year and 7 percent from last quarter. (See Brocade Boasts Big Quarter.) Cisco's storage revenue isn't as clear because it doesn't break out SAN revenue, but the company claimed Fibre Channel sales rose more than 20 percent from last year, and Wall Street analysts estimate it crept up in double-digits sequentially. (See Cisco Storage Rebounds.) In contract, McData's revenue decreased 7 percent sequentially.

Analysts believe Brocade benefited from having 4-Gbit/s gear on the market first. McData began shipping 4-Gbit/s switches last fall -- nearly a year behind Brocade -- and has yet to release 4-Gbit/s directors. Brocade started selling 4-Gbit/s directors last August and Cisco's hit the market last month. (See Cisco Goes 4-Gig & Big.)

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