Goldman Conference: Brocade Does Little to Reassure Investors

LA QUINTA, Calif. -- Presiding over a leading company in the white-hot network storage sector, Brocade (BRCD Quote) CEO Greg Reyes can usually draw a pretty good crowd. But the massive crowd gathered for Reyes' presentation Tuesday at the Goldman Sachs Technology Investment Symposium here was clearly there for reasons beyond the usual bullish fascination with the company.

"Gee," said one money manager in the crowd. "You'd almost think there'd been a blowup in Brocade's sector yesterday or something."

Brocade, which makes fibre-channel switches that connect storage-area networks to one another, fell a whopping 15% Monday amid the downdraft created by Emulex's (EMLX Quote) warning that some of its large customers were delaying their orders. But Reyes started his presentation by citing the company's quiet period, making it clear right off the bat that he wasn't going to be making any comments about whether his company was seeing any of the problems that Emulex has been seeing.

Instead, Reyes gave a basic presentation outlining the story that has driven Brocade's stock up dramatically over the last two years.

You know the one. The Internet has forced an exponential character on the accumulation of data and the concomitant need to store it. Storage networking is displacing the traditional server-attached storage model as the most cost-effective and reliable way for companies to build out their data-storage capacity. And Brocade is right there in the middle of that sweetest of sweet spots.

Reyes reiterated the company's vow to build more market share in the storage-area-network market in its fiscal first-quarter, the results of which the company is scheduled to report on Feb. 21.

Investors clearly would like more reassurance than that. While the rest of its sector was rebounding from Monday's horror show, Brocade recently was falling another $8.13, or 13%, to $54.88.