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Brocade's sales growth outpaced by costs, ahead of Broadcom buyout

Wi-Fi, routing up; SANs down

By Richard Chirgwin, 22 Nov 2016

Ahead of its acquisition by Broadcom, Brocade has turned in another quarter of growing revenue but slumping net income.

Revenue for the quarter was up 12 per cent year-on-year to US$675 million, and the company's full year 2016 result at $2.35 billion was 4 per cent better than 2015.

Fourth quarter profit was $66 million (down from $84 million for Q4 in 2015), while the full-year's $214 million is well down from 2015's $340 million.

Costs rose in R&D, sales and marketing, and the admin load involved in digesting Ruckus Wireless, which added nearly $200 million of operating expenses in 2016.

CEO Lloyd Carney name-checked Ruckus as one of the growth drivers, which is interesting since earlier this month when the Broadcom deal landed, the whole IP networking operation (including the Wi-Fi business) was put up for sale. No buyer has yet emerged.

Ruckus revenue helped add 51 per cent to the IP networking business, taking it to $256 million for the quarter. The division brought in $730 million for the year.

Fibre Channel SAN revenue did what Fibre Channel SAN revenue does: at $303 million the quarter was seven per cent lower than Q4 2015, with director sales down 18 per cent and embedded switches off by 13 per cent.

In the Q4 announcement, Carney says Brocade will be adding to its IP networking range in the first quarter of 2017, which he'll doubtless hopes will adds to the price tag the new owners fetch for the business. ®

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