McData Merely Mediocre

Wait ‘til next year” remains the McData Corp. (Nasdaq: MCDTA) rallying cry in the wake of another lackluster quarter while waiting for new products to roll out.

McData today reported its revenue last quarter was basically flat with the previous quarter, rising a piddling $300,000 to $98.5 million -- barely making the low end of its guidance and falling below analysts’ expectations. According to Reuters, industry analysts expected $99.9 million in revenue.

McData reported income of $4.6 million or $0.04 earnings per share, which was higher than expected but included about $3.1 million or $0.03 EPS of benefit from better than expected tax credits and deductions. Without the tax items, McData’s income met its guidance and analysts’ consensus. McData’s income last quarter was $2 million or $0.02 EPS, and it reported income of $2.7 million or $0.02 in the same quarter last year.

McData’s revenue grew 4 percent from last year, and its modest sequential gain at least put it ahead of rival Cisco Systems Inc. (Nasdaq: CSCO), which earlier this month reported a 2 percent decline from last quarter for its storage business (see Cisco Storage Slips). The other major Fibre Channel switch vendor, Brocade Communications Systems Inc. (Nasdaq: BRCD), reports earnings Monday.

McData CEO John Kelley calls the last period “a seasonally slow quarter.” Product revenue fell 2 percent sequentially and 9 percent from last year to $73.2 million, despite a 13 percent sequential and 16 percent year-over-year increase in ports sold. Director revenue fell sequentially while switch revenue rose. Software revenue also slipped 2 percent from last quarter.