Updated with closing share price.

SAN JOSE, Calif. (

TheStreet

) --

Brocade

(BRCD)

shares sank on Tuesday as investors responded to the company's first-quarter results and weak 2010 outlook.

The switchmaker missed analyst expectations for its first-quarter revenue and gave a disappointing guidance for the full year when it released its results on Monday after market close. In response, Brocade's shares plunged $1.60, or 22.99%, to $5.32, outpacing the broader dip in tech stocks that saw the Nasdaq fall 1.28%.

Brocade

received a slew of downgrades

on Tuesday as analysts pounced on weakness in the company's Ethernet switching business and market share losses in the enterprise space.

"Ethernet Original Equipment Manufacturer

deals are slow to materialize," wrote Munjal Shah, an analyst at Jefferies & Company, downgrading the company to hold. "Brocade has a solid position in the data center and relative valuation is low, but we believe it will take some time to resolve the execution issues."

In a statement released on Monday, Brocade CEO Mike Klayko promised to "re-energize" the company's Ethernet business, which was impacted by lower-than expected revenue from federal customers. In a presentation accompanying the results, Brocade also highlighted "slower-than-anticipated development" in its Ethernet channel strategy, appearing to confirm analysts' concerns about sales volumes through its OEM partners.

"We believe that the stock may just tread water for the next couple of months," warned Kaushik Roy, an analyst at Wedbush Morgan, in a note released on Tuesday. Roy reduced his Brocade price target from $12 to $10 but maintained his outperform rating for the company.

There were some positives in Brocade's results, as the company swung to a first-quarter profit.

The storage specialist earned 11 cents a share on net income of $51.1 million, a stark contrast to the same period last year when the company posted a loss of 6 cents a share on a net loss of $23.9 million.

Brocade also posted revenue of $539.5 million, up from $431.6 million in the prior year's quarter, but well short of the $548.43 million average forecast of analysts. Excluding items, Brocade earned 19 cents a share, compared to same period last year, when it earned 15 cents a share. Analysts surveyed by Thomson Reuters had predicted earnings of 15 cents.

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The Silicon Valley firm, which competes with

Cisco

(CSCO) - Get Report

,

Hewlett-Packard

(HPQ) - Get Report

and

QLogic

(OLGC)

, also gave guidance after market close on Monday.

For fiscal 2010, the company expects revenue between $2.1 billion and $2.2 billion, below analysts' estimate of $2.26 billion. Excluding items, Brocade predicts earnings between 54 and 58 cents a share. Analysts surveyed by Thomson Reuters are currently forecasting earnings of 60 cents a share on average.

-- Reported by James Rogers in New York

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