Cisco rival Brocade hitting stride in Ethernet

After intial hiccups swallowing Foundry, Q4 indicates solid traction

Brocade's fortunes are rising in Ethernet switching. After a few initial hiccups following the Foundry acquisition, Brocade is seeing solid traction.

In its just completed fiscal 2011 fourth quarter, Brocade said switching product sales grew 13% in the year to $670 million, a record for the company. Fourth quarter revenue was up 11% when sales of services is factored in.

Ethernet revenues grew 12% from Q3, and 95 of the top 100 accounts made purchases in Q4. Enterprise and federal, which ended its fiscal year in September (this market rebounded for Cisco as well), drove switch sales, Brocade reports.

Sales of Ethernet switches and services to service providers rose 33% and 19% to enterprises in 2011, and the company has over 300 early adopters of its new VDX fabric switches. Brocade's banking on VDX to drive its Ethernet business long-term.

Brocade's quarter was good all the way around. SAN business was up 8% from Q3 and 10% in product only, with 16G FibreChannel contributing $40 million. The stock jumped 13% after results were announced. Whoever's buying them better jump in quick.

Or not. Despite the strong tailwinds in Q4 and upbeat guidance for Q1 FY 2012, there might be some turbulence ahead. Though the double digit product growth was impressive, investment firm UBS is more grounded in its expectations:

We see Brocade as a ~3-4% grower, with Storage likely flattish and IP/Ethernet driving topline expansion.

And then there's always the economy. Europe/Middle East/Africa was also strong for Brocade in Q4 but turmoil in Europe will likely impact the global economy, and micro-economies like the U. S. government.  Notes Oppenheimer & Co. in its bulletin on Brocade's quarter:

We expect Federal spending to decrease next quarter, and we are concerned with EMEA due to the macro environment. In addition, while we feel Brocade is taking the appropriate steps to grow its Ethernet business (VCS, building channel), competition continues to rise.

In other words, pretty much business as usual.

More from Cisco Subnet:

HP "beat the crap" out of Cisco, others

Cisco, sources reveal data center next steps

Cisco's 'Jawbreaker' seen as response to competitive pressure

Cisco grapples with transition as switches and routers lag

Cisco caught off guard by switching hit

Cisco switching transition "poorly managed and timed"

Should Cisco Sell?

FCoE: From fee to free

Cisco's alright with free FCoE

Follow all Cisco Subnet bloggers on Twitter.Jim Duffy on Twitter


Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.
Must read: 10 new UI features coming to Windows 10