McData Earnings Exceed Expectations

Increase sales of products to IBM customers offset decline in EMC customer sales.

McData Corp., the second-biggest storage switch maker after rival Brocade Communications Systems Inc., reported better than expected second quarter revenues Thursday of $77.3 million, with $2.6 million and .02 per share in losses, versus last years loss of $5 million and .04 per share.

"We made great progress in achieving our long-term goals and near-term priorities," said John Kelley, president and chief operating officer, who takes over as CEO Aug. 1.

Sales to customers of EMC Corp.s storage products declined slightly, but sales to IBM customers increased, officials said. Sales of McDatas 2-Gb per second switches were better than expected, and sales of products that support the FICON standard, which allows redundant connections to mainframes using serial connections, were also encouraging and are expected to grow further, officials said.

Besides more FICON support, the second half of the year will see new products that let users increase a storage-area networks geographic span, and a new version 3.5 of McDatas SANavigator software, Kelley said.

The second half will also see interoperability announcements and new products, Kelley said, without giving details. However, sources said, one announcement will relate to an extension of McDatas current interoperability with QLogic Corp., while another will be a new relationship with Cisco Systems Inc.

One of the new products will be an IP storage blade, developed in-house by McData, the sources said.