Brocade now just +0.7% AH; FQ2 guidance light

• Though it soundly beat FQ1 estimates, Brocade (NASDAQ:BRCD) guides in its earnings presentation for FQ2 revenue of $520M-$540M and EPS of $0.17-$0.19, mostly below a consensus of $540.9M and $0.19. Adjusted free cash flow is expected to total $120M-$130M, up from $110M a year earlier.
• SAN product sales (61% of revenue) only fell 2% Y/Y in FQ1, which proved a rough quarter for the storage industry. Brocade claims its gained 5 points of share (likely at Cisco's expense) on a Y/Y basis. IP networking (Ethernet switch) sales, hurt by federal weakness, fell 15%.
• Gross margin was 67.7%, +50 bps Q/Q and +170 bps Y/Y, and above a guidance range of 66% -67%. Job cuts allowed opex to fall 10% Y/Y to $251.2M.
• $140M was spent on buybacks during the quarter, up from $53M in FQ4.
• SAN product revenue is expected to drop 10%-13% Q/Q in FQ2, a little better than typical seasonality. IP networking sales are expected to be flat to up 7% Q/Q thanks to "a modest recovery" in the Americas.
• FQ1 results, PR