Get the lowest-cost and the best server colocation service in the business. Learn more.
Information Technology News.

Brocade's revenue up 12 percent year-over-year

Share on Twitter.

Get the best SMTP service for your business. Guaranteed or your money back.

November 25, 2015

Brocade has been firing on all cylinders evenly for the past four years at around $2.25 billion annual revenues with steadily rising profits.

Its fiscal 2015 results added a similar fifth year of pretty decent results as well.

It saw $2.26 billion in revenues and a $340 million profit, while in full year 2014 it saw $2.21 billion in revenues and a $238 million profit, indicating that things are going fairly well, and that CEO Lloyd Carney has been doing an acceptable job on average.

The final quarter of this full year showed growth on the annual compare rather well. Revenues were $589 million, 4.4 percent higher than 2014, with profits of $84 million, or just 0.7 percent higher.

Overall, Brocade is a well-managed and mature supplier of networking products but where are the growth prospects?

The fourth quarter SAN (Fibre Channel) product revenue was $325 million, flat year-over-year and up five percent quarter-over-quarter.

For the 2015 fiscal year, SAN product revenue was $1.30 billion, down two percent year-over-year, primarily due to lower switch and embedded switch sales, although partially offset by higher director sales.

In the fourth quarter of this full year, IP networking product revenue was $170 million, up 12 percent year-over-year, and 10 percent quarter-over-quarter.

The fourth quarter year-over-year increase was primarily driven by a 28 percent increase in Ethernet switch sales and improved software sales, but partially offset by a 20 percent decline in router revenue.

For the full year IP networking product revenue was $601 million, up 14 percent year-over-year due to stronger switch, router and software sales.

So, Ethernet gear sales are growing but not enough to offset declining Fibre Channel product revenues. Brocade expects revenues between $550 billion and $570 billion, which is about 2.8 percent lower than the year-ago period.

Stifel marketing director Aaron Rakers notes that the company expects IP networking revenue to decline by a 16 to 22 percent rate sequentially, due mainly to a seasonal U.S. federal decline and slowing router sales.

The rest of the year looks mildly positive, with Network Packet Broker products looking good, as do converged IP storage platforms.

China is still positive for the Fibre Channel, with Brocade having done recent deals with Huawei and Lenovo and hoping for one with Inspur to be finalised by the end of calendar 2015.

Rakers points out that during its September Analyst Day, Brocade outlined an expectation that the Fibre Channel SAN market would be down one percent in 2016 and 2017.

On the other hand, Brocade expects its IP networking addressable markets to grow from $33.9 billion in 2015 to $37.3 billion by 2017 so we'll see.

The SAN growth glory days are well over as hyperconverged systems, virtual SANs, iSCSI, Big Data analytics HDFS, and the public cloud all combine to limit Fibre Channel SAN growth.

It faces the Cisco meat-grinder in Ethernet and is making progress, but break-out growth looks unfeasible.

Brocade has settled for running its FC and Ethernet businesses as effectively as possible in the these current circumstances and is no longer a growth company, but it remains a well-managed one nevertheless.

Source: Brocade.

Get the best SMTP service for your business. Guaranteed or your money back.

Share on Twitter.

IT News Archives | Site Search | Advertise on IT Direction | Contact | Home

All logos, trade marks or service marks on this site are the property of their respective owners.

Sponsored by Sure Mail™, Avantex and
by Montreal Server Colocation.

       © IT Direction. All rights reserved.