McData Bounces Back in Third Quarter

After losing money in Q2, the storage switch maker earns $2.1 million.

McData Corp. on Thursday announced third-quarter revenues of $80.9 million, earning $2.1 after a second quarter that saw a $2.6 million loss.

"This is a great time for McData. We have executed well," CEO and President John Kelley said when announcing the earnings.

About 80 percent of revenue in the quarter came from 2 G-bit-per-second switches; that will be nearly all revenue in the next quarter, said Kelley, in Bloomfield, Colo.

The 1G-bit switches are no longer on the assembly line, but there is some inventory and they could be built if a customer needed one, he said.

McDatas latest director-class switch, the Intrepid 6140, is available now from original equipment manufacturers Hitachi Ltd. and IBM, and will be available from others, like EMC Corp., next quarter, he said. EMC this quarter accounted for 56 percent of McDatas revenue; IBM was 20 percent, officials said.

Though traditional networking giant Cisco Systems Inc. is not yet a significant storage-networking player, "we welcome new entrants because we believe it validates our market opportunity," Kelley said.

A near-term product update will be version 3.5 of McDatas SANavigator software, with new performance management features, he said. Also, Kelley said McData will demonstrate—but not actually announce—both iSCSI switching and new security features at the Storage Networking World show in Orlando, Fla.

During the earnings call, Kelley did not give an update on McDatas ongoing patent-infringement lawsuit with Brocade Communications Systems Inc., of San Jose, Calif. The current injunction being sought by McData would stop Brocade from selling the allegedly infringing frame filtering technology. Kelley said in the interview the judge has gone beyond the traditional 30- to 60-day waiting period to rule on the injunction.

In the fourth quarter, McData expects $84 million to $86 million in revenue, with more adoption of its Fibre Connect and 6140 products, officials said.