Updated from May 29

Happy with a return to profitability and a decent second-quarter outlook, investors on Friday pushed shares of McData ( MCDTA) up more than 20% on very heavy volume.

In recent trading, Class A shares of the storage networking company had gained $2.36, or 21%, to $13.35. Because the company is the product of a spinoff, McData trades under two symbols -- MCDT and MCDTA.

On Thursday the company posted a first-quarter profit, reversing the loss in the year-ago period, and reported substantial growth in revenue.

The company reported revenue of $103.2 million for the first quarter ended April 30, up 60% from $64.5 million a year earlier.

Net income was $5.3 million, or 5 cents a share, compared with a loss of $17.1 million, or 15 cents a share, last year. Excluding items, the company earned $6.7 million, or 6 cents a share.

Revenue from products totaled $91.4 million in the first quarter, up 66% from the first quarter of 2002. Director-class revenue rose to $67.6 million, a 46% increase from a year ago. Switch and other product revenue was $23.7 million. Revenue from software and professional services was $8.4 million, up 41% year-over-year.

Jason Adler, who covers the company for Thomas Weisel Partners, raised his estimate of fiscal 2003 revenue to $436 million from $423 million, but cautioned investors looking at the sector not to assume growth that everyone's boat was about to rise. "McData's success in the low-end/midrange fabric switch segment appears to come largely at the expense of Brocade, which has not found a way to slow McData's competitive momentum. As a result, we believe it would be inappropriate to interpret McData's results as a positive for other fibre channel switch vendors," he wrote in a research note published Friday. Thomas Weisel has a banking relationship with McData.

For the second quarter, McData expects revenue of $106 million to $110 million. The company projected earnings, before items, of 6 cents to 7 cents a share.

Analysts polled by Thomson First Call were looking for earnings of 5 cents in the first quarter, and Wall Street is expecting a profit of 6 cents in the second quarter.

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