Cisco Storage Slips

Cisco Systems Inc. (Nasdaq: CSCO) storage revenues took a dip last quarter, reversing momentum it had built with its Fibre Channel switches over the last year.

Cisco CEO John Chambers told analysts on a conference call today that storage revenue decreased 2 percent from last quarter, while the companys overall revenue grew 0.8 percent. Chambers said storage revenue grew 160 percent from last year. In context, however, Cisco had negligible revenue in the same quarter last year due to production problems (see Cisco Still a Kid in Storage).

As usual, Cisco didn’t specifically break out its storage numbers, but the company gave enough of a hint to determine its revenue (see Cisco Storage Stays Mysterious). Cisco’s revenue was put by most estimates at around $40.6 million last quarter, up from $29.6 million the quarter before -- all based on Cisco's storage figures released in January, followed by year-over-year and quarter-to-quarter growth rates provided by the company.

So a loss this quarter would put revenue a bit below $40 million.

The decline was a surprise considering reports from market research firms showed Cisco gaining share from rivals Brocade Communications Systems Inc. (Nasdaq: BRCD) and McData Corp. (Nasdaq: MCDTA) over the past few quarters (see Cisco's Gained Ground, Says Report and Report Outlines FC Growth, Challenges).Analysts expect switch market leader Brocade to report revenue of $154 million, up from $150 million last quarter year and $137.8 million last year. The McData forecast is for revenue of $99.87 million, up slightly from $98.2 million last quarter and 94.7 million last year -- although analysts expect McData's director revenue to drop sequentially. McData will report November 18 and Brocade on November 22.

If the analysts are correct, it would appear Brocade received a boost from the new switches it rolled out this year, particularly its Silkworm 24000 director (see Brocade Launches Meteor). Like McData, which is poised to refresh its product line later this year, Cisco might have been caught in a product transition (see McData Stays Out of the Red). Cisco in September announced a new MDS 9216i switch to take better advantage of the new multiprotocol services, and it's waiting for the switch to complete qualification with its OEM partners (see Cisco Readies Multiprotocol Switch).

Bottom line? The latest quarter shows Cisco improved storage revenue from last year, but it's been on a see-saw in 2004.

— Dave Raffo, Senior Editor, Byte and Switch