Brocade Boosts Guidance

The company cites strong blade-server switch demand.
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Network storage gear maker

Brocade Communications

(BRCDE)

expects fourth-quarter results to be at or above the high end of its prior projections, due in large part to strong demand for directors and embedded switches for blade servers.

In addition, the company said, sales in the fourth quarter benefited from pent-up demand associated with the introduction of the SilkWorm 48000 director, which began shipping in volume in the fourth quarter.

Brocade said it now expects fourth-quarter revenue of $144 million to $146 million and earnings before items of 6 cents to 7 cents a share, above its previous expectations for revenue of $140 million to $145 million and earnings before items of 3 cents to 4 cents a share.

Following the announcement late Wednesday, the company's shares rose more than 6% after the bell to $4.41 on Instinet.

The company said sell-through, a measurement of OEM and channel partner sales to end-users, is expected to rise 10% to 12% to $157 million to $160 million in the fourth quarter, above prior expectations of $145 million to $150 million.

As a result, the number of weeks of inventory of switches and directors held by Brocade OEM partners decreased by nearly one week, to about two-and-a-half weeks of inventory on hand. The company had previously expected to end the fourth quarter with about three weeks of partner inventory.

Shares of Brocade are well off their lows of the year following the company's

restatement of three years of financial results on Monday; the news buoyed investors' hopes following an uncertainty over the matter that had depressed the stock for months.