"Our short-term visibility has never been more opaque," CEO Greg Reyes told analysts during a conference call last night. He said normally Brocade has no problem getting "90 to 100 days' forecasting visibility" into what its customers plan to do. Now, he says, channel partners and direct customers are stalling on orders for Q2.
Reyes said he can't pinpoint the cause. "We have a confluence of conflicting data points," he jargoned. It adds up to customers rethinking their budgets. In a "softening" economic climate, he said, businesses of all kinds are getting stingier about how they're allocating IT dollars.
Similar cries of an order slowdown and reduced visibility have rippled through the storage networking market this week, causing analyst downgrades for other companies in the segment, including Finisar Corp. (Nasdaq: FNSR), McData Corp. (Nasdaq: MCDT), Network Appliance Inc. (Nasdaq: NTAP), and QLogic Corp. (Nasdaq: QLGC).
But analysts insist SANs in general, and Brocade in particular, have a bright future.
"SANs are definitely not fizzling," say Ara Mizrakjian, senior research analyst at Robertson Stephens. "I think we're seeing short-term response to macroeconomic concerns by enterprises. In the long term, the prospect for all [SAN] vendors is excellent, and particularly for [Brocade], since they own so much of the market."