Cisco may be experiencing some near-term delays with its MDS storage switch refresh

In his research note this week, RBC Capital Markets Managing Director - Mark Sue is concerned that Cisco may be experiencing some near-term delays with its MDS storage switch refresh, providing Brocade with an incremental share gain window of opportunity. Sue was more upbeat about Brocade's prospects, "Near-term demand remains solid for Brocade with positive trends with key OEM partners despite the uncertain macro as storage continues to rank high in terms of IT spend. Our recent dialogue with storage vendors indicates Brocade's strong fibre channel OEM ties and, if anything, Cisco's aggressive push into the data center may be the catalyst for IBM and HPQ to strengthen their respective Ethernet connections with Brocade as well. So while Brocade may lose some share with EMC much longer term as Cisco gains traction with its Unified Computing Platform, we think the company may more than make it up on the Ethernet switch side." Sue continued with his Brocade analysis, "For the current quarter, we're estimating revenues of $474M and EPS of $0.08, broadly in line with consensus. There's an extra week's worth of expenses this current quarter, so we're not expecting any meaningful upside to our bottom-line earnings. Seasonality and the continued upgrade cycle of the 8 gig centric DCX backbone director switch may enable overall revenues to grow at least 2% sequentially in the July quarter to our estimate of $485M. "FCoE interest remains high, yet real world deployments remain low, implying regular fibre channel deployments will persist for many years. Brocade is citing strong investment protection of its fiber channel equipment while it prepares for FCoE in the future. Brocade recently unveiled its new 8000 series top of rack FCoE switch along with several new converged adapter cards (CNAs)." Interestingly, Brocade executives recently began blogging too!


What's your analysis, why would Cisco be experiencing near-term delays with its MDS storage switch refresh? BradReese.Com Cisco Refurbished - Services that protect, maintain and optimize Cisco hardware Contact: Brad Reese Twitter: http://twitter.com/BradReese

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