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Foundry Flies on 10-Gig

Foundry Networks Inc. (Nasdaq: FDRY) took a step toward renewed stability with its second-quarter results last night, boosted by strong demand for its 10-Gbit/s Ethernet switches.

Foundry reported second-quarter revenues of $96.6 million. Although this figure was down from $97.8 million reported in the same period last year, it was well above analyst estimates of $87.08 million, and ahead of first-quarter revenues of $84.6 million (see Foundry Reports Q2 Results). Earnings were 7 cents per share on net income of $9.6 million in the quarter, in line with analyst estimates, compared to 11 cents on net income of $15 million in the year-ago quarter.

Foundry's rebound appears driven by its high-speed Ethernet gear. Foundry's shipment of 10-Gbit/s ports grew 53 percent between the first and second quarters of this year. And enterprise sales rose 20 percent in the quarter.

Foundry is one of a number of vendors, including rivals Cisco Systems Inc. (Nasdaq: CSCO) and Extreme Networks Inc. (Nasdaq: EXTR), that are driving down the cost of 10-Gbit/s switches. It's a message that resonates with customers that need faster Ethernet to cope with increased data volumes, particularly in high-end enterprises and telcos. (See Foundry Boosts 10-Gig Plans, 10-GigE Price Drops Continue, Cisco Bombs 10-GigE Pricing, and Components Fuel 10G Ethernet Takeoff.)

Foundry's strategy in 10-Gbit/s appears to be working, relative to the competition. The vendor continues aggressive pricing against Cisco (see Foundry Drops 10-GigE Prices). And it's also beefed up its products with security and traffic management.

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