Brocade's fat pipes shrink: Fibre Channel revenue dip ahead

Brocade has cut its current quarter's estimated revenue by between $19m and $34m, implying there may be trouble afoot in the Fibre Channel world.

Brocade makes Fibre Channel equipment for use linking networked storage arrays to servers, plus a line of Ethernet switch gear. Recently the company reduced its revenue expectations for the second quarter of fiscal 2013, which ended 27 April.

Brocade had said it expected this quarter's (Q2 2013) revenues to be between $555m and $575m, representing a seasonal drop from Q1 where revenues ran at $588.7m, but a rise on the same quarter a year ago ($543.4m). Now Brocade expects this quarter's revenues to be between $536m and $541m.

Its SAN revenues are expected to be down six to seven per cent year-on-year and 10 to 11 per cent compared to Q4 2012, while it predicts its IP Networking revenues should be 14 to 15 per cent up year-on-year and down four to five per cent on the last quarter of 2012.

Although CEO Lloyd Carney said weak SAN sales this quarter were "due to storage demand softness in the overall market", Brocade's customers "continued to increase their purchases of our Gen 5 (16Gbit/s) Fibre Channel SAN portfolio."

Carney went on to blame the market's "softness" for "[impacting] the company's revenue from some of its OEM partners."

So which Brocade storage OEM partners are seeing lower Fibre Channel storage array sales? As Stifel analyst Rakers noted, "IBM’s hardware results were seasonally disappointing."

Your correspondent figures EMC, with its rumoured poor VNX sales in the quarter, might also bear some of the responsibility. This, EMC implied, was due to a forthcoming product refresh that had delayed orders.

Brocade's full second quarter results are due out on 16 May. ®