USB Piper cut estimates on Brocade Communications (BRCD).
The company posted $0.05 v.s $0.06 Q3 EPS despite a 26% revenue rise. Analyst Ashok Kumar says the results were in line with estimates. He notes his channel checks show storage area network (SAN) implementation still is anemic. As such, he cut the $0.45 fiscal 2002 (Oct.) EPS estimate on $670 million in revenues to $0.35 on $600 million in revenues. He says gross margins were stable at 60% due to favorable component costs and long-term pricing contracts. But Kumar expects network storage vendors to share the pain of EMC's aggressive pricing strategy.
Kumar says EMC and other system vendors are expected to squeeze component suppliers to cut costs. He thinks the company's expectations of stable margins is unrealistic. Kumar maintains his neutral rating.