SAN Maker McData Reports Down Quarter

McData officials said on Monday that the company lost $50 million in the third fiscal quarter of 2003. In addition, revenue declined.

McData Corp. officials said on Monday that the company lost $50 million and its revenue dipped to $94.7 million for the third fiscal quarter of 2003, compared to a profit of $9.1 million on $107 in the second quarter.

In comparison, the in Broomfield, Colo.-based storage switch maker reported earnings of $2.1 million on $80.9 million in the year-ago period.

Pricing pressure from storage newcomer Cisco Systems Inc., long sales cycles and tough pricing negotiations with EMC Corp. were the primary causes, Chief Executive Officer and President John Kelley explained.

However, "end user demand for our products and services remains solid. In spite of competitive pressures, we continue to see strong customer preference," he said.

According to Kelley, McDatas back-end and product integration plans for technologies from its recent acquisitions of Nishan Systems Inc. and Sanera Systems Inc. are fully on track. Both of those deals are final, with products due in 2004, he said.

The fourth quarter could be even tougher, regarding pricing pressures, officials added, still, McData has $317 million on its balance sheet. Fourth-quarter revenue is expected to fall between $108-$116 million, they said.

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