EXHIBIT 99.1
[BROCADE LETTERHEAD]
BROCADE CONTACTS
MEDIA RELATIONS INVESTOR RELATIONS
Leslie Davis Shirley Stacy
Tel: 408.333.5260 Tel: 408.333.5752
lmdavis@brocade.com sstacy@brocade.com
BROCADE CITES OPERATIONAL PROGRESS AND GROWTH PLANS
New Product Cycle and Optimized Organization Set to Accelerate
Targeted Financial Performance and Growth
SAN JOSE, CALIF. -- MAY 19, 2004 -- Brocade Communications Systems, Inc.
(Brocade(R)) (Nasdaq: BRCD), today followed its second quarter financial results
by outlining the next phase of its operational and organizational plan for long
term leadership in the Storage Area Network (SAN) infrastructure market.
Building on its continued positive financial performance, improved operating
efficiency and successful new product development programs, the company is
further optimizing its business model and aligning its organization to
accelerate profitability and improve revenue growth.
"Today Brocade announced its fifth consecutive quarter of improved financial
performance, confirming our belief that growth in the network storage market is
sustainable for companies that offer compelling and competitive products to
their trusted OEM partners and value to the end customer," said Greg Reyes,
Brocade Chairman and CEO. "We are also seeing the positive results of our
strategic plan to achieve market leading positions across the entire spectrum of
the SAN market, while optimizing our business model for increased shareholder
value."
The organizational alignment, being implemented immediately, will result in
greater efficiencies and streamlined operations, a more leveraged development
model, a consolidated sales organization optimized for more in-depth coverage,
and a more customer-focused marketing organization. As a result of the actions
announced today, Brocade reduced its workforce by 110 employees, or 9%, and
incurred a $10.5 million restructuring charge for severance, asset impairments
and contract terminations.
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"The majority of the measures we are taking are structural but, unfortunately
there are some valued employees that will be affected," continued Reyes. "I feel
confident that all of these actions combined, place Brocade in its best
competitive position in over two years - strategically and operationally - and
will result in a healthier and more leveraged business model with room to invest
for future growth."
In its second fiscal quarter earnings announcement (see today's press release:
"Brocade Reports Second Quarter of Fiscal 2004 Results"), Brocade noted that it
had successfully launched new product platforms for the entry-level, mid-range
and enterprise market, as well as the emerging bladed server market segment.
This is the largest rollout of new products in the company's history. With these
expanded product introductions completed, Brocade's SAN switch offerings now
operate on a common software code base and shared hardware architecture,
resulting in significant efficiencies in product development. These
efficiencies, continuing improvements in processes, and ongoing cost reduction
programs enable Brocade to streamline product design and development to the
benefit of our shareholders.
The company also announced that it is combining two previously distinct sales
teams, the first one focused on OEM partners and the other on end-users and
channel partners-into one organization going forward. Michael Klayko, formerly
Brocade VP, Marketing and Support, has been appointed to lead the combined sales
organization with focus on increasing coverage, agility, and operational
efficiencies of the company's go to market model with a renewed focus on revenue
growth.
CONFERENCE CALL
Brocade will host a conference call on Wednesday, May 19, 2004, at 2:00 p.m.
Pacific Time, 5:00 p.m. Eastern Time to discuss its second quarter of fiscal
year 2004 results and business consolidation. The conference call will be
webcast live via the Internet at www.brocade.com/investors. A replay of the
conference call will be available via webcast for twelve months at
www.brocade.com/investors.
ABOUT BROCADE COMMUNICATIONS SYSTEMS, INC.
Brocade (Nasdaq: BRCD) offers the industry's leading intelligent platform for
networking storage. The world's leading systems, applications, and storage
vendors have selected Brocade to provide a networking foundation for their SAN
solutions. The Brocade SilkWorm(R) family of fabric switches and software is
designed to optimize data availability and storage and server resources in the
enterprise. Using Brocade solutions, companies can simplify the implementation
of storage area networks, reduce the total cost of ownership of data storage
environments, and improve network and application efficiency. For more
information, visit the Brocade website at www.brocade.com or contact the company
at info@brocade.com.
CAUTIONARY STATEMENT
This press release contains forward-looking statements, as defined under Federal
Securities Laws. These forward-looking statements include statements regarding:
the company's plan to accelerate the achievement previously stated in financial
model targets; belief that growth in the network storage market is sustainable
for companies that offer compelling and competitive products to OEM partners;
the extent to which the next phase of the operational and organizational plan
will enable Brocade to achieve market leading positions across the spectrum of
the SAN market, increase its strategic value to OEM partners and end-customers,
increase shareholder value, realize greater efficiencies and streamline
operations, experience a more highly leveraged development model, have a sales
organization optimized for more in-depth coverage and a more customer-focused
product organization, and be in the best competitive position. These statements
are just predictions and involve risks and uncertainties, such that actual
results may differ significantly. These risks include, but are not limited to,
quarterly and annual fluctuations in our revenues and operating results; the
effect of changes in IT spending levels; the effect of competition, including
pricing pressure; our dependence on OEM partners; declines in the prices of our
products and gross margins; our ability to attain profitability; our ability to
manage the transition between new and older products; our ability to achieve
market acceptance of the Silkworm Fabric Application Platform product family;
our ability to develop new and enhanced products that achieve widespread market
acceptance; our failure to manage distribution channels, inventory levels and
relationships; risks associated with international political instability; our
failure to adequately anticipate future OEM and end-user product needs or to
accurately forecast end-user demand; risks associated with increased
international sales activity; the loss of our third-party contract
manufacturers; our dependence on sole source and limited source suppliers for
certain key components including ASICs, microprocessors, logic chips and
programmable logic devices; our failure to manage our business effectively in a
rapidly evolving market; the existence of undetected errors in our products; our
ability to retain and recruit qualified personnel; and our ability to protect
our intellectual property and defend against infringement claims. These and
other risks are set forth in more detail in the Company's reports on Form 10-K
for fiscal year ended October 25, 2003 and Form 10-Q for the fiscal year ended
January 24, 2004. Brocade expressly assumes no obligation to update any such
forward-looking statements.
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Brocade, the Brocade B weave logo, Secure Fabric OS, and SilkWorm are registered
trademarks of Brocade Communications Systems, Inc., in the United States and/or
in other countries. FICON is a registered trademark of IBM Corporation in the
U.S. and other countries. All other brands, products, or service names are or
may be trademarks or service marks of, and are used to identify, products or
services of their respective owners.