Brocade: Recession dampens data-center trials

The ailing economy is leading some enterprises to put off transforming their data-center networks with emerging technologies such as FCoE (Fibre Channel over Ethernet), Brocade Communications' CTO said.

IT managers are delaying transitions to converged networks that use a single protocol across both the storage and server areas of a data center, CTO Dave Stevens said in an interview after the company announced a steep increase in revenue for its first fiscal quarter, which ended Jan. 24.

It was the first quarter since Fibre Channel storage network pioneer Brocade acquired Foundry Networks, an Ethernet LAN vendor. FCoE and Converged Enhanced Ethernet (CEE) are two emerging standards designed to combine the strengths of Fibre Channel and Ethernet.

“People are pushing back on trialing converged infrastructure right now,” Stevens said. That reflects a greater selectiveness in pursuing IT projects as enterprises move into a mode of buying just what they need, he said.

However, growing network traffic and collections of data, along with requirements to keep data for longer periods, are forcing enterprises to upgrade their networks, he said. In doing so, they are saving money by consolidating ports in fewer platforms, such as large Ethernet switches that can accommodate as many connections as 10 smaller boxes, Stevens said.

“The FCOE stuff and the CEE stuff seem to be pushing out a little bit, and there seems to be more emphasis on the Ethernet side and the Fibre Channel side to implement high-density switching systems in both of those environments,” he said.

Brocade reported revenue of $431.6 million for the quarter, up 8 percent from the previous quarter and 24 percent from a year earlier. That figure included about one month of revenue from Foundry, which was folded into the company in late December. It fell short of the consensus forecast of analysts by Thomson Reuters, which was US$441.7 million.

The company posted a loss of $26 million, or $0.07 per share, because of one-time items that mostly were associated with the Foundry deal, according to Stevens. Not including those items, Brocade earned $63.6 million or $0.15 per share, exceeding the consensus forecast of analysts by Thomson Reuters, which was $0.13 per share.