Brocade posts $26 million quarterly loss, record revenues

After acquiring Foundry in December, all eyes in the networking industry were on Brocade as it declared itself ready to do battle with Cisco. Today, Brocade reported quarterly results -- a whopping $26 million loss due to the acquisition. In January, Brocade's self-confident new CTO, Dave Stevens, let himself engage in a little market buzz trash talk against the San Jose giant. ("The industry is ready for a second viable player that's able to deliver an end-to-end solution," he said.) Although Brocade's results beat expectations (after adjusting for acquisition costs), Cisco is not likely shaking in its boots quite yet.

Specifically, Brocade (NASDAQ:BRCD) posted a loss of $26 million, or 7 cents per share, compared with a profit of $19.8 million, or 5 cents per share, in the same quarter a year ago. This includes $19 million in legal fees and $4.4 million in acquisition-related financing charges. Excluding those and a few other miscellaneous items, the company recorded income of 15 cents per share for the quarter ended Jan. 24. Analysts polled by Thomson Reuters expected profit of 13 cents per share. Also note that Brocade's sales rose 24 percent to a quarter record of $431.6 million compared to $347.8 million from the same quarter last year.

But Brocade's sales were $10 million short of the estimated $441.7 million in revenue that Wall Street expected. Consider that Brocade spent $2.6 billion on Foundry, and is therefore shouldering $1.2 billion in debt. Now factor in that the economy is melting down and you can see that Brocade didn't give itself an easy charter when taking on Cisco, the giant in the market.

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