Brocade Warns of Softness in the SAN Business in Q2

Brocade expects to report revenue in the range of $536 million to $541 million for the fiscal quarter ended 27-April-2013, compared to previous guidance of $555 million to $575 million.  Diluted earnings per share (EPS) are now expected to be in the range of $0.15 to $0.16 on a non-GAAP basis, compared to previous guidance in the $0.14 to $0.16 range.

Brocade anticipates that it will report Q2 2013 Storage Area Networking (SAN) business revenue, including product and services, between $373 million to $376 million, which is down approximately 6% to 7% year-over-year and down approximately 10% to 11% quarter-over-quarter. SAN product revenue is typically down 5% to 8% sequentially in the Company's second fiscal quarter, but the lower-than-expected SAN revenue was due to storage demand softness in the overall market which impacted the Company's revenue from some of its OEM partners.

Brocade anticipates that it will report Q2 2013 IP Networking business revenue, including product and services, between $163 million to $165 million, which is an increase of approximately 14% to 15% year-over-year and down approximately 4% to 5% quarter-over-quarter. The year-over-year revenue growth was driven in part by the updated Brocade campus LAN portfolio, higher VDX and Ethernet fabric sales, as well as improvements in sales execution.

"In Q2, we saw lower-than-expected revenue in SAN due to softness in the overall storage market. However, customers continued to increase their purchases of our Gen 5 Fibre Channel SAN portfolio and we made good progress on our IP Networking growth initiatives including solid growth in Ethernet fabrics during the quarter," said Lloyd Carney, CEO of Brocade. "We believe that by leading the Fibre Channel industry with innovative technology and solutions that are relevant to the problems that customers face today, Brocade continues to be well-positioned for long-term success in the data center. We will provide more details on our second quarter results at our earnings call on May 16."

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