November 24, 2009 – Brocade mildly surprised financial analysts this week when it reported its fourth fiscal quarter and full fiscal year end with, for the most part, good news. Highlights: Quarterly revenues increased 31% year-over-year to $521.8 million, and annual revenues increased 33% year-over-year to more than $1.95 billion.
CEO Mike Klayko noted that Brocade had exceeded the Street’s consensus non-GAAP EPS estimates for the seventeenth consecutive quarter.
In the fourth quarter, Brocade shipped about one million SAN ports.
Comparing Q4 2009 to Q4 2008, OEM revenues were down from 88% to 65% of total revenues, while channel/direct revenues jumped from 12% to 35% of total revenues. On a related note: storage-specific revenues, as a percent of total revenues, fell from 84% to 58%, while revenues from Ethernet products accounted for 25% of the total in Q4 2009 compared to 0% in the pre-Foundry-acquisition Q4 2008.
Klayko had plenty to say, but his comment about a possible acquisition was what made the news. “We’re not actively shopping ourselves. That’s false.” I suppose that depends on what “actively” means, but the financial community seems to think that an acquisition isn’t about to happen now that HP opted for 3Com, which squelched speculation that HP would scoop up Brocade. Since the HP-3Com announcement, Brocade shares have been down more than 10%. They closed at $7.10 today. The 52-week range was $2.05 to $9.84.
I’m sure stockholders were hoping for (betting on) an acquisition, but Brocade seems to be in great shape on its own. Cisco isn’t giving them much of a run for the money in the FC switch space; Brocade is gaining a toehold in the FC HBA space; it’s gaining share in the Ethernet market; and the company will be well-positioned in the FCoE/CEE field by the time that battle hits full stride. In other words, when end users actually start deploying FCoE.
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