Cisco Storage Spikes

One quarter after taking a step backward, Cisco Systems Inc. (Nasdaq: CSCO) made a leap forward in storage revenue at the end of 2004 that suggests it picked up market share on its major rivals (see Cisco Reports Q2).

Cisco reported 40 percent sequential growth and a 70 percent year-over-year increase in storage last quarter, a big improvement from November when it announced a 2 percent sequential drop in revenue (see Cisco Storage Slips). Even taking into account that the final quarter of the year is traditionally strong for storage sales, Ciscos 40 percent jump to $56 million in revenue is impressive.

Market leader Brocade Communications Systems Inc.’s (Nasdaq: BRCD) guidance for the quarter calls for a 2 to 5 percent increase in revenues, while No. 2 McData Corp. (Nasdaq: MCDTA) guided for an increase of 5 to 7 percent (see Brocade Tops Switch Sales and McData Merely Mediocre). Brocade reports its earnings Feb. 19, and McData reports Feb. 24.

“We’ve moved into a new market where we were not a player at all, and are currently growing at five times the industry growth rates,” Cisco CEO John Chambers told analysts on a conference call Tuesday night. “So [we’ve had] very rapid market share positioning in that category.”

Financial analyst Aaron Rakers of A.G. Edwards backs up the CEO's claim in a note today, estimating that Cisco gained 4 to 5 percent in its share in the overall SAN switch market and 5 percent in the director space.