Brocade Reports Record Earnings, Income Growth

Networking vendor delivers record earnings as they hint at a major new Ethernet launch in March.

By Sean Michael Kerner | Posted Feb 22, 2012
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Brocade (NASDAQ: BRCD) is starting its fiscal 2012 out on a strong note. The networking vendor reported first quarter fiscal 2012 earnings late Tuesday showing good growth in storage and a flat showing for Ethernet products and services.

For the quarter, Brocade reported revenues of $561 million which is a three percent year-over-year gain. Net income was reported at $59 million, which is more than double the $27 million the company reported for the first quarter of 2011.

Brocade's storage business grew by four percent to $406.4 million and Ethernet business revenues came in at $153.3 million for a one percent gain.

"Another highlight in the quarter was the performance of our service provider business, which generated more than $64 million in revenue; another company record," Michael Klayko, CEO of Brocade said during the company's earnings call. "Many of these customers are now upgrading their network infrastructure to enable the delivery of new services and capabilities such as cloud computing."

Klayko noted that the Brocade MLX and MLXe family of routers, saw revenue growth of 17 percent year-over-year and the Brocade ADX application delivery switches had 13 percent annual revenue growth. Brocade recently updated the ADX platform with scripting capabilities called Openscript. The new capabilities give Brocade new competitive positioning against application delivery controller (ADC) provider F5 and their iRules scripting technology.

The Effortless Networkbrocade mlx series router

Overall, Brocade is now in the process of transitioning to a new portfolio of enterprise Ethernet products.

"These products are part of the strategy and technologies behind the Effortless Network, which we believe will inject some much needed game changing innovations into the current Campus LAN environment," Klayko said.

Klayko declined to provide any additional details during the earnings call about the specifics of the Effortless Network portfolio. He did note that the official launch is scheduled for March 6.

Jason Nolet, vice president of the Data Center and Enterprise Networking Group at Brocade said during the call that Brocade does expect that the new Effortless Network Campus products will have improved margin relative to the existing portfolio.

Brocade's Chief Marketing Officer, John McHugh, said that the Effortless Network program will be rolled out in a channel-centric manner, instead of simply just being solutions for enterprise LAN. He noted that the Effortless Network components have been designed from the ground up to be effective for channel selling as well as being competitive from a cost of ownership perspective.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @TechJournalist.

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