McData Sees Profits, StorageNetworks Sees Trouble

Same sector, different directions.

McData reported financial results will be at the high end of previous estimates, while StorageNetworks announced that two of its directors have quit and that it has hired an investment banking firm to “explore options.”

“We are very pleased with the continued demand for our new products, as well as strong sales across all of our product lines,” John Kelley, McDATA’s CEO and president, said at the Broomfield, Colorado company’s analyst day.

The company expects revenues near the top of the $92 million to $97 million spread and earnings of between 2 cents per share and 4 cents per share. The consensus of analysts polled by First Call Thomson Financial was earnings of 3 cents per share.

McData’s success is largely due its partner strategy. While it spun out of industry giant EMC , its enterprise hardware, software and services are also available through Hitachi Data Systems, Hewlett-Packard, IBM and StorageTek.

Last month, McData expanded its geographic reach with the opening of an office in Beijing to serve customers in China and elsewhere in the Asia-Pacific.

More details about McData’s corporate strategy, products and compeitive positioning are expected to come out of its analyst day.

News for StorageNetworks Not as Rosey

The news out of Waltham, Massachusetts isn’t as rosey. StorageNetworks late last week reported that it has hired investment banking firms to identify and assess all available alternatives to maximize shareholder value.

At the same time, the provider of storage management software and services said that directors George McClelland and William Weyand have resigned.

“Going forward, we anticipate that our board of directors will be required to focus significant energy and time working with our investment bankers and other advisors to identify and assess opportunities to maximize shareholder value,” Paul Flanagan, StorageNetworks CEO, said in a statement.

Flanagan took the helm in January after the resignation of Peter Bell. Flanagan joined the company in 1999 and most recently served as COO and CFO.

At the time Flanagan took quick action to reduce costs, cutting 110 jobs, or 50 percent of StorageNetworks’ workforce. He cited the “current economic climate and the immaturity” of some of StorageNetworks’ target markets as the impetus for move.

Flanagan said the company would reorganize around its relationship with technology services provider Electronic Data Services. A StorageNetworks spokeswoman was not immediately available for comment.

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