Brocade Peers Largely Unaffected Following Q2 Warning

Shares of Brocade Communications Systems, Inc. BRCD plunged more than 12 percent on Monday after the company reported preliminary second quarter results.

Brocade said it expects to earn $0.21 to $0.23 per share in the second quarter on revenue of $518 million to $528 million. Wall Street analysts were expecting the company to earn $0.23 per share on revenue of $551 million.

"Consistent with the general softness in IT spending reported by many of our partners and peers, we expect revenue for the quarter to fall short of our original expectations," said Lloyd Carney, CEO of Brocade. "This is largely the result of weaker than anticipated SAN revenue. In addition, IP Networking headwinds, noted on our fiscal Q1 2016 earnings call in February, continue to negatively impact our sales, particularly in our service provider and U.S. federal business. We are addressing these near-term challenges by continuing our focus on sales execution in this weaker demand environment, maintaining prudent expense controls and managing our investments in line with our stated priorities. We continue to execute on our strategy to build a pure-play networking company for the digital transformation era that expands our market reach, diversifies our revenue mix, and creates exciting, incremental opportunities for growth."

Despite the sharp sell-off in Brocade's stock, its peer group were widely unaffected.

Shares of Nimble Storage Inc NMBL were trading lower by 2.44 percent, NetApp Inc. NTAP's stock was lower by 1.18 percent and Cisco Systems, Inc. CSCO saw its stock trading near flat.

Shares of EMC Corporation EMC and QLogic Corporation QLGC were both trading higher by around 0.40 percent.