On a more upbeat note, Brocade reported that it increased its port shipments during the quarter by 10 percent, to a total of 2.8 million to date. The company also said it increased its cash holdings by $4.4 million during the quarter, to $909 million.
Another positive for Brocade during the quarter, according to Roy, was that it managed to keep its gross margins high, at 54.1 percent. But while the company says it expects its fourth-quarter gross margins to remain high, between 53 and 55 percent, Roy says they're bound to start slipping.
"When Cisco brings out their midrange product starting in October," he says, "that's when it's really going to hurt them. Their gross margins will definitely be under a lot more pressure."
Eugénie Larson, Senior Editor, Byte and Switch
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