Broadcade Communications (BRCD) Q4 2009 Earning Call Recap

BRCD operates in two segments: Storage and Ethernet.  The challenge to BRCD is revenue from Ethernet segment did not meet expectation, according to company statement

This business model is driven by our two key markets, namely our core Storage Networking business and our
newer Ethernet business, which we acquired in Fiscal 2009. During the quarter our Storage Networking
business grew a very healthy 16.3% sequentially. We believe our success in Storage Networking provides a
robust strategic and financial platform for our Ethernet business as we build upon our product portfolio and
account penetration in that market. The high level of customer satisfaction and our reputation in Storage
Networking helps open doors to accounts at the highest levels and provides us with new opportunities to sell
our Ethernet product portfolio along with the resources to build out our distribution model to increase share
in this multi-billion dollar market.

It is clear, however, that we have some work to do in growing our Ethernet business to the levels we expect.
In short, our Ethernet business did not meet our revenue expectations, largely due to lower-than-expected
revenues from Federal customers and slower-than-anticipated development in our go-to-market routes.
However, we have focused on the issues behind these results and have taken immediate steps to rectify
them. We faced and successfully overcame similar challenges when we entered the Fibre Channel business
more than a decade ago. At that time, we recognized that product superiority and channel presence alone
are not sufficient to drive revenues. We needed and established customer intimacy by evangelizing our
technologies, solutions and expertise to customers and channel decision makers.

Leveraging this experience, Brocade is accelerating its strategy and redeploying resources to drive direct
account acquisition and penetration in our Ethernet business. Our stated strategy is to focus on new
account penetration and to have 1000 new Ethernet accounts by the end of 2010. As we exited Q1, we are
on track to exceed this goal. Building share requires sustained effort; and we expect success to take time,
but we have planted flags throughout the Global 2000, and are confident in our resources, vision and
commitment to succeed.