Brocade Grows Revenue, Swings to Loss

Storage specialist Brocade(BRCD Quote), which is just starting to digest its massive Foundry Networks(FDRY Quote) acquisition, swung to a loss in its first quarter, despite enjoying strong revenue growth.

The company, which recently completed its $2.6 billion purchase of switch specialist Foundry Networks, posted a loss of $26 million, or 7 cents a share, compared to profit of $35.6 million and 9 cents a share in the same period last year.

Brocade's revenue, however, grew 24% over the same period to $431.6 million, although this was below analysts' estimate of $441.7 million.

Excluding charges, Brocade earned 15 cents a share on net income of $63.6 million, down from 20 cents a share and $75.8 million a share in the year-ago quarter, but above analysts' estimate of 13 cents.

The firm's operating margin was 26.1%, roughly the same as the first quarter of 2008.

Brocade's results, which came out after market close, pushed the firm's shares up 2 cents, or 0.6%, to $3.40 in extended trading.

"Brocade achieved another strong quarter in terms of revenues and better-than expected operating margins," said Brocade CEO Michael Klayko in a statement. "These results were fueled by a healthy mix of products and services, including IP networking solutions from our recently integrated Foundry business."

The San Jose, Calif.-based firm, which competes with Emulex(ELX Quote), Cisco(CSCO Quote) and QLogic(QLGC Quote), has now finalized its roadmap for combined Brocade/Foundry products.

"We have been successful to date integrating the Foundry team and have begun to re-organize the combined company in order to more quickly and proactively take advantage of the opportunities afforded us," said Klayko.