SAN FRANCISCO, Sept 26 (Reuters) - Shares of data storage
networking stocks dropped on Thursday, led by Brocade
Communications Systems Inc.(NASDAQ:BRCD), which declined to update
guidance at an investment conference.
Shares of Brocade dropped nearly 20 percent and storage
heavyweight EMC Corp. (NYSE:EMC) fell almost 13 percent.
Brocade Chief Financial Officer Tony Canova declined at a
conference hosted by Banc of America Securities to update
guidance for the quarter, which closes at the end of October,
saying it was company policy not to provide such updates.
"People apparently are reading into this that they are
going to pre-announce," said Gary Helmig, a storage analyst at
SoundView Technology.
Brocade had commented at such conferences in the past but
apparently changed its policy a couple of months ago, Helmig
said.
The association with storage networking was hurting EMC,
which makes storage systems that work with Brocade's products
that direct storage network traffic, he added.
"The market is worried about anything that's going to have
a hiccup, because it can get so trashed so quickly."
Canova said customers were focused on driving down costs
and were consolidating data storage and computer servers.
"We've seen the end-customer dynamics remain solid," he said,
which Helmig interpreted positively.
He also said that he had found no indication EMC's business
was unexpectedly poor.
Thomas Weisel Partners analyst Kevin Hunt trimmed EMC
revenue estimates for its fiscal year ending in December to
$5.65 billion from $5.7 billion, with a loss of 4 cents per
share and said his analysis put fair value of the stock around
$6 per share. However, he kept the outlook for the current
quarter steady.
"IT (information technology) spending remains slow in
general, and large high-end projects continue to be pushed
out," Hunt wrote in a note, saying spending had shown no
improvement or deterioration.
Brocade's products manage the flow of data on storage
networks, pools of machines that store information and that can
supply it to many computers.
Networking giant Cisco Systems Inc.(NASDAQ:CSCO) is moving into
the storage arena. Canova said Brocade had unique technology
and a dominant position in storage networking.
Shares of Brocade fell $2.042 to $8.328 on the Nasdaq and
EMC lost 76 cents to close at $5.25 on the New York Stock
Exchange.
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