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August 22, 2014

Brocade beats analysts’ estimates despite lower profit

But revenues rise 2% to $545m.

By Amy-Jo Crowley

Networking firm Brocade has beaten analysts’ expectations, although it has reported a fall in profit for the third quarter.

The San Jose-based company, which recently joined the 25G Ethernet Consortium, said net income for the third quarter ending August 2 hit $87.4m or $0.20 per share, down from $118.7m or $0.26 per share compared to the same period last year, as revenues rose 2% to $545m.

On average, analysts had estimated revenues of $534.7m and earnings of $0.19 per share, according to data compiled by Thompson Reuters.

Growth was partly driven by higher sales of Ethernet switching products to the US federal government as well as VDX sales to data centre customers, according to Brocade.

"With another solid quarter behind us, we are seeing the tangible benefits of our data center focused strategy," said Lloyd Carney, CEO of Brocade, in a statement.

"The resilience and durability of our SAN business, along with strong Brocade VDX(R) sales, validate our strategic direction."

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However, sales for routers fell 19% from the same period last year, which Brocade blamed on customers waiting for newer products, including the 100Gbit/s VDX blades, scheduled to be released in the next quarter.

The company also predicted that IP networking would increase by 6% to 15% in the next quarter, partly driven by increased demand in the carrier market for new products.

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