SAN product sales (60% of revenue) -10% Q/Q and +1% Y/Y, putting them at the high end of a guidance range of -10% to -13% Q/Q. IP networking +1% Q/Q and -9% Y/Y, near the low end of a guidance range for flat to 7% Q/Q growth.
Brocade expects FQ3 SAN revenue to be down 2% to up 1% Y/Y on an adjusted basis, with "business transitions" at certain OEM partners taking a toll (could be a reference to IBM). QLogic and Emulex have already reported the Fibre Channel SAN market is weak.
IP networking sales are expected to be up 2%-8% Y/Y on an adjusted basis, boosted by enterprise customer growth.
FQ2 gross margin was 66.7%, -100 bps Q/Q and +160 bps Y/Y. GM is expected to drop to 65.5%-66.5% in FQ3. Headcount fell by 16 Q/Q and 587 Y/Y to 4,061.
$50M was spent on buybacks, down from $140M in FQ1. EMC, IBM, H-P, and Hitachi made up 56% of revenue between them.