Brocade Tops Bottom Line

During the conference call, Klayko said that the trend to reduce the size and complexity of corporate data centers plays to Brocades strengths.

The company's storage area network gear is two to three times more energy efficient than competitors' models, he said.

But Chief Financial Officer Richard Deranleau warned that third-quarter seasonal slowdown may be more pronounced this year because of an expected slowdown in sales of look for storage and server shipments.

Deranleau forecast sales of $330 million to 340 million, slightly below analysts' consensus estimate. Excluding non-recurring items, the company expects earnings per share between 10 cents and 12 cents, in line with analysts' views.

Acquiring McData left a relative duopoly between Brocade and Cisco Systems (CSCO Quote) in the market for storage are network gear. According to market research firm Dell'Oro Group, Brocade now holds roughly 70% of the market, giving it additional pricing power.

In the third quarter, CFO Deranleau expects only single-digit declines in average selling prices, slower than normal.

After hours, shares were recently trading down 10 cents to $8.89.

The earnings report came out a few hours after Brocade confirmed that it will pay a $7 million civil penalty to the Securities and Exchange Commission to settle charges that executives backdated stock option grants.

The company said that the agreement closes the SEC's investigation and that it does not expect the Department of Justice to pursue a separate case.