Shares of Brocade (NASDAQ: BRCD) lost nearly a quarter of their value today after the storage networking switch leader posted unexpectedly weak sales in its Ethernet business acquired from Foundry a little more than a year ago.
Brocade’s Ethernet networking sales were down 26 percent, significantly worse than the recent performance of rivals Cisco (NASDAQ: CSCO), Juniper (NASDAQ: JNPR) and HP (NYSE: HPQ). The company blamed weak government sales and a faulty OEM sales model.
“We are frustrated with Brocade’s results, not just Government Ethernet switching, but also the clear market share losses in enterprise and persistent declines in service provider Ethernet switching, as well as what we consider a lack of definitive color with the company’s strategic direction toward a recovery going forward,” Aaron Rakers, an analyst at Stifel Nicolaus, wrote in a research note this morning.
Wedbush analyst Kaushik Roy called Brocade’s data storage sales “super strong.”
“It is clear that Brocade remains the dominant provider of Fibre Channel switches, with close to 70 percent market share,” Roy wrote. “But at this point investors are watching the Foundry/IP revenues.”
Broadpoint AmTech analyst Brian Marshall said it will take “a couple of quarters” for Brocade to steady its Ethernet business.
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