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McData Stays Out of the Red

McData Corp. (Nasdaq: MCDTA) has avoided the money-losing quarter expected of it. Market share appears to be another matter, though.

McData today reported revenue of $98.2 million for last quarter, up 1 percent from the previous quarter but down from the $107 million reported in the comparable period last year. Its net income was $2 million or $0.02 per share, up from $1.1 million and $0.01 sequentially but way below its $11.5 million net income and $0.10 earnings per share in the same quarter last year.

Still, McData CEO John Kelley claimed victory because the company came in within its revenue guidance of $92 million to $100 million and beat its EPS guidance of break-even to minus $0.02 (see McData Sees Another Quarter Pounding). McData also beat Thomson First Call estimates of $96.2 million and minus $0.01.

Our positive results for the quarter demonstrate that we are meeting the needs of an expanding market,” Kelley said on a conference call with analysts.

Yet there’s little chance that McData’s market share is expanding. Its two main SAN switch rivals reported higher growth last quarter. Brocade Communications Systems Inc.’s (Nasdaq: BRCD) revenue was up 3 percent from the previous quarter and 12 percent from the same period last year. Cisco Systems Inc. (Nasdaq: CSCO), still a distant third in market share, said its SAN switch share increased 41 percent sequentially and 180 percent from last year (see Brocade Cautious About Growth and Cisco Storage Stays Mysterious). Even worse for McData was that much of its rivals’ gains came in the director space where McData is strongest.

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