McData could be facing other pressures, too. Brocade Communications Systems Inc. (Nasdaq: BRCD) intends to ship its Silkworm 12000 core switch towards the end of the fourth quarter (see Is Brocade's SilkWorm Losing the Thread?).
This product, Brocade's first pass at the director market, will compete head-to-head with McDatas switches, which have kept McData on top of this particular market segment for a couple of years.
Analysts say it's possible that the threat from Brocade, combined with a poor economy and weak demand, could increase the pressure on McData -- and on its margins.
By early afternoon Friday, both McData and Brocade were taking a hit in the public markets. McData was down 8.33 percent a share to $11.66, while Brocade was down 5.5 percent at $19.03.
Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com
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