Brocade third quarter revenue decreased 3 percent to $536.6 million.
“The storage market is recovering more quickly than we had anticipated entering our third quarter and, coupled with continued strong adoption of Gen 5 Fibre Channel, contributed to good Storage Area Networking (SAN) revenue results,” said Lloyd Carney, CEO of Brocade.
“In IP Networking, our Federal sales were disappointing while Brocade VDX™ switch revenue showed continued growth in Q3, underscoring our leadership in Ethernet fabrics. We are making great progress toward our spending-reduction goal, and are already seeing the benefits in our financial results and cash flow,” Carney added.
SAN business revenue, including products and services, declined 2 percent to $369.2 million. In a continuing soft storage market that began in Q2 2013, end-user demand showed improvement in the third fiscal quarter.
Gen 5 (16 Gbps) Fibre Channel products represented approximately 64 percent of director and switch revenue in the quarter, higher than the 29 percent reported in Q3 2012 and 52 percent in Q2 2013.
IP Networking business revenue — products and services — decreased 6 percent to $167.3 million. The decline was due to lower sales into the U.S. federal government as some expected orders moved out of the third fiscal quarter in a challenging budget environment.
Federal revenue dipped 42 percent to $19.9 million in the quarter. Non-Federal IP Networking revenue, including data center, enterprise and service provider customers, increased 3 percent to $147.4 million.
Gross margin improved to 63.0 percent 61.3 percent. The year-over-year improvement in gross margin was due in part to a more favorable product mix within the IP Networking segment and lower spending.