If

EMC's

(EMC)

quarterly report dampened the spirits of storage investors,

McData

(MCDTA)

and

QLogic

(QLGC)

might have convinced the believers in the sector that things aren't as bleak as they seemed earlier Thursday.

After the close of trading, McData, an EMC spinoff, posted a loss in the latest second quarter, but the company's results beat analysts' expectations, and the storage networker offered guidance for the back half of the year that would also exceed estimates.

The company reported second-quarter revenue of $77.3 million, up 20% from the first quarter, but down 5% from the same period a year ago, when McData had a top line of $81.3 million.

When calculated according to generally accepted accounting principles, McData lost $3.9 million, or 3 cents a share. A year ago, the company earned $3.4 million, or 3 cents a share. Excluding certain items, the company lost $2.6 million, or 2 cents a share, compared with earnings before items of $5 million, or 4 cents a share, a year ago. On that basis, the company beat expectations, as analysts were looking for a loss of 7 cents.

The company said third-quarter revenue will be in the range of $83 million to $84 million, representing quarter-over-quarter growth of 7% to 9%. McData projected a third-quarter loss, before items, of 1 cent to 2 cents a share. For the fourth quarter, the company expects to break even, plus or minus a penny, on revenue of $90 to $92 million.

Analysts are expecting a third-quarter loss of 5 cents a fourth-quarter loss of 2 cents.

Meanwhile, QLogic said revenue for the fiscal first quarter rose 10% to $99 million from $89.9 million using GAAP methods. Net income climbed to $23.1 million, or 24 cents a share, from $19.2 million, or 20 cents a share, in the prior year.

Excluding certain items, QLogic earned $25.3 million, or 26 cents a share in the quarter, up from $21.1 million, or 22 cents a share, last year. Analysts were calling for a profit of 23 cents.

Thursday morning, EMC said it doesn't see the IT spending environment improving in 2002, but the company also

said the situation didn't seem to be getting worse. Still, worries that the tech recovery could be getting pushed out again pressured the storage sector, including EMC, which finished down 2.7% at $8.40.

Shares of QLogic were up 4.1% to $42.92 on Instinet after the close of regular trading. McData was jumping 20% to $10. Both stocks ended the regular session lower. Another company in the storage sector,

Brocade

(BRCD)

, was climbing 3.6% to $20 after the close.