The cuts appear to be heavily concentrated in marketing and sales, the Wall Street analyst added. Meanwhile, a former Brocade employee says some engineering groups were also hit hard. Brocade spokeswoman Fenella Tigner said the layoffs affected all divisions of the company.
Last week at the company's analyst meeting in Las Vegas, Brocade executives said they were "comfortable" with its previous guidance for the April 2003 quarter of between $128 million and $133 million in revenue, which would be up 4 percent to 8 percent sequentially. Analysts expect Brocade to break even for the current quarter, excluding charges related to its acquisition of Rhapsody Networks (see Brocade Puts Up Q1 Loss and Brocade Scoops Up Rhapsody).
Shebly Seyrafi, an analyst with A.G. Edwards, notes that even after last quarter's 12 percent workforce reduction, Brocade's operational expenses are still "bloated."
"They're trying to rationalize the expense structure to reflect the revenue realities," he jargons. [Ed. note: As opposed to the unrealities?]
In "the good old days," Seyrafi says, the company's total operating expenses averaged 48 percent of net revenues; for the most recent quarter, ended Jan. 25, 2003, that figure was 55 percent. A 20 percent layoff, he says, would bring Brocade's expenses down to the mid-40s as a percentage of net revenues.
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