Brocade Nabs McData VPs

Turnover continues at McData, which has seen changes atop sales and marketing in recent months

June 18, 2004

3 Min Read
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McData Corp. (Nasdaq: MCDTA), which lost its top sales and marketing guys over the last seven months, has lost three more sales executives -- and this time the defectors ended up at SAN switch rival Brocade Communications Systems Inc. (Nasdaq: BRCD).

The Brocade raid includes two former McData VPs of OEM sales for EMC Corp. (NYSE: EMC) and IBM Corp. (NYSE: IBM) -- McDatas largest customers.

Kevin Langan, Greg Fahey, and Ric Pepe joined Brocade this week. Langan, McData’s former VP of EMC OEM sales, will work on Brocade’s EMC team. Fahey headed McData’s IBM OEM sales and will work on Brocade’s IBM team; and Pepe will be part of Brocade’s effort to expand sales outside of OEM partners.

The EMC and IBM relationships are crucial to McData. Last quarter, 47 percent of McData’s revenue came from EMC and 25 percent from IBM.

The moves come at a bad time for McData, which is struggling with financial and personnel losses (see McData Sees Another Quarter Pounding), even as Brocade appears to be expanding its market lead with recent new product releases, despite its own staff reductions and the loss last week of former VP of North American sales Greig Patton, who left to become sales VP of switch startup Maranti Networks Inc. (See Brocade Hits Estimates, Lays Off 110, Brocade Outlines Market Plans, Brocade Denies More Cuts, and Maranti Lands Brocade VP.)But Brocade isn't McData's only worry. Though most analyst firms rank it market leader in director switches, McData also faces losing share to Cisco Systems Inc. (Nasdaq: CSCO), a relative newcomer into the Fibre Channel switch space.

Recent figures from market research firm Dell'Oro Group, for example, show Cisco SAN switch revenue grew 18 percent last quarter, while Brocade grew 2 percent and McData dropped 7 percent (see Report: Cisco SANs Grew 18%). McData reported product revenue dropped 13 percent in the last quarter, with declines in director and lower-end switches.

This could be fueling internal malaise. “It seems the morale is really down at McData,” says Kaushik Roy of Susquehanna Financial Group. “Cisco is continuing to hurt McData.”

One analyst says the latest defections appear a result of changes at the top of McData’s sales structure.

“The hits just keep on coming for McData,” Punk Ziegel & Co.

analyst Steve Berg says. “It’s like, ‘We don’t like the new guy -- we’re leaving.’ ”Mike Gustafson quit as McData’s senior VP of marketing and sales last month and became president of NAS startup BlueArc Corp. this week (see McData Loses Another and Gustafson Leads Exec Carousel). McData is searching for Gustafson’s replacement.

Also, Alain Andreoli resigned as McData’s executive VP of worldwide sales and service last November to take over as CEO of privately held storage system vendor XIOtech Corp. (see McData Sales Boss McExits and Ex-McData EVP to Head XIOtech). Gary Gysin was promoted from VP of software to executive VP of worldwide sales in January to replace Andreoli.

— Dave Raffo, Senior Editor, Byte and Switch

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