Brocade CEO Focuses on Growth Areas for 2013

Brocade CEO reveals IP growth, SAN slowdown, and future plans during the vendor's Q2 FY2013 earnings call.

By Sean Michael Kerner | Posted May 17, 2013
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Brocade's new CEO, Lloyd Carney, wants his company to focus more on key growth areas in 2013 and beyond. That's one of the key messages coming out of Brocade's second quarter fiscal 2013 earnings call.

Brocade reported its second quarter fiscal 2013 earnings late Thursday, with revenue coming in at $539 million, down marginally from the $543 million reported in 2012. Net income grew to $47 million, up from the $39 million reported for the second quarter of 2012. Moving forward, Brocade provided third quarter guidance for total revenues between $510 million and $530 million.

Q2 results were a mixed bag for Brocade, with slowing Storage Area Networking (SAN) revenues and growing IP Networking revenues. Brocade reported Q2 SAN at $319 million, a 7 percent year-over-year decline.

"We were disappointed in our SAN sales in the second quarter due to short-term slowing in the storage market and execution challenges at certain of our large OEM partners," Carney said during his company's earnings call.

The vendor reported IP Networking Q2 revenues at $133 million, a 17 percent year-over-year gain. Carney attributed the IP Networking growth to his company's expanding campus LAN business, higher routing sales, and the success of Brocade's Ethernet fabric products.

Future growth plans

In order to help propel Brocade forward, Carney has a plan for future growth. Carney was named CEO of Brocade in January and has spent much of his time since then evaluating the business opportunities and operations of Brocade.

"While I believe that our fundamental direction has been sound, we're evolving and adapting our business strategy to markets where we have been, and can continue to be, most successful," Carney said. "This means focusing the data center network opportunity for highly virtualized, cloud-enabled enterprises and service providers."

A key part of that strategy will involve enabling the on-demand data center. Brocade announced its on-demand data center initiative in April as a way to build out an agile, software-defined networking infrastructure. That infrastructure makes use of the Vyatta software routing technology that Brocade acquired in November 2012.

Brocade also plans to focus on capturing large market opportunities, such as the federal government.

"As the federal government looks to reduce spending and improve efficiencies in its networks, they will look for innovative products and solutions with a compelling ROI, like Brocade Ethernet fabrics and our refreshed campus LAN products, to meet their needs," Charney said. "We believe that by focusing on this large opportunity and the requirements of the federal vertical, we'll be able to provide significant value-add to this customer while leveraging our investment across other campus LAN customers."

 

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.

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