A delay in agreeing terms with EMC – its largest OEM partner – had forced it to warn that revenue in its third fiscal quarter to October 31 2003 will be between $93 and $95 million, and not the $107 to $112 million it previously forecast.
EMC is by far the largest of the OEM partners for McData, and accounted for 62% of the switch maker’s revenue in its last quarter – up just one point sequentially.
Spurred by new alternatives to McData’s hardware from Brocade Communications Systems Inc [BRCD] and Cisco Systems Inc [CSCO], EMC has clearly decided to rework its terms of business with McData.
McData said it could not make any public forecast of earnings for its current fourth fiscal quarter so close to its third quarter earnings announcement that is scheduled for 1 December.
EMC’s hardball may be followed by others from IBM [IBM] and Hitachi Ltd [HIT], who each account for around 20% of McData’s revenue.
McData made it clear that the deal it has struck with EMC is not fully finalized, but was otherwise vague about the arrangement with its largest partner.
In order to reduce the reliance on EMC for so much of its sales, McData signed Dell Corp [DELL], Storage Technology Corp [STK] and Sun Microsystems Inc [SUNW] as additional OEMs and resellers in the first quarter this year. Yesterday it also announced a deal with NEC Corp [NIPNY]
This article was based on material originally published by ComputerWire.
