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McData, Emulex Rake It In

McData Corp. (Nasdaq: MCDTA) and Emulex Corp. (NYSE: ELX) both turned in solid year-end quarterly results yesterday, each putting up double-digit growth in sales for the last three months of the year.

However, analysts cautioned that various factors will keep each of these Fibre Channel players from sustaining those growth levels through 2003. The stock prices of each company were down in midafternoon trading today. McData was down 9.4 percent, to $8.06, and Emulex was down 3.4 percent, to $20.65, amid a general decline in the markets.

McData reported $105.5 million in sales and net income of $8.6 million -- in line with its previously raised guidance -- for the quarter ended Dec. 31, 2002 (see McData Posts Record Q4 Sales and McData Blows Doors Off Q4).

Leading its top-line growth were sales of director-class switches, which were $75.7 million, up 30 percent sequentially. McData also showed strong growth in its fabric switches product, with revenues of $16.3 million, up 40 percent compared with the previous quarter. Analysts say McData clearly took some share away from Brocade Communications Systems Inc. (Nasdaq: BRCD), with particular strength in the high-end segment.

The company credited its new Sphereon 4500 midrange switch and high-end Intrepid 6140 director for the bump in sales. "More than 20 percent of revenue last quarter was derived from new products, reflecting strong demand and market share gain," said John Kelley, McData's CEO and president, on a conference call with investors yesterday.

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