There's arguably no good time for a tech company to post a disappointing quarter, but this is clearly an especially bad time. With investors worried about tech stocks in general, and IT enterprise providers like Cisco (CSCO), Juniper (JNPR), and Riverbed (RVBD) more particularly, this was a dangerous time for Brocade (BRCD) to disappoint the Street.
A Tough Q3
But disappoint Brocade did, announcing that third quarter revenue was going to come in about 10% short of its guidance and the average analyst guess. Unfortunately, it looks like a broad miss. The storage business looks to be down about 5-6% as partners like EMC (EMC), Dell (DELL), and IBM (IBM) held less inventory and end-market demand has softened.
While the Ethernet business looks to be up 12-13%, the company cited weaker spending overall, and weaker federal spending in particular, as the prime sources of disappointment. Federal spending has been an odd topic of late – it seems intuitive that Federal spending would be weaker right now, but companies like Cisco, Juniper, Riverbed, and F5 (FFIV) have posted a wide range of results in this respect.
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Brocade Not Completely Unraveled Yet
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