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Brocade guides in-line; gross margin better than expected

  • Brocade (NASDAQ:BRCD) guides in its earnings slides (.pdf) for FQ1 revenue of $560M-$580M and EPS of $0.23-$0.25. SAN revenue is expected to rise 5%-7% Q/Q (seasonal strength), an IP networking revenue to fall 8%-14% (federal and service provider weakness). Services revenue is expected to rise 1%-3%.
  • FQ4 SAN revenue was roughly flat Q/Q and Y/Y at $379M, and up 2% Y/Y when adjusted for the sale of Broacade's adapter business to QLogic. Director (high-end switch) revenue fell 5% Y/Y and server product revenue (hurt by the QLogic deal and soft OEM demand) 27%, but standard SAN switch revenue rose 6%.
  • IP networking revenue rose 12% Q/Q and 4% Y/Y. A pickup in router demand and a 38% Y/Y increase in U.S. federal sales drove the growth.
  • Gross margin was 67.7%, +50 bps Q/Q and Y/Y, and beating guidance of 66%-67%. FQ1 guidance is at 66.5%-67.5%. Opex was 40.9% of revenue vs. 41.5% in FQ3 and 40.6% a year ago. $33M was spent on buybacks.
  • EMC, H-P, and IBM accounted for 44% of revenue, down from 48% in FQ3 and 46% a year ago.
  • BRCD -1.1% AH. FQ4 results, PR

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BRCD--
Brocade Communications Systems, Inc.