New products with added features (such as the migration of files while they are in use) are catering to increasing demand for high-capacity data storage devices. A new 8 Gb/sec switch, which increases speed by 100% and reduces energy use by 40%, is being purchased by original equipment manufacturer partners. Nevertheless, the economic downturn has dampened the demand for IT equipment, with year over year revenues only increasing by 2.7%.
Citigroup expects an increase in demand of some Brocade Communications products. Brocade had announced Q3 results last month which had exceeded expectations, and the company has benefited from the acquisition of McData Corp. Citigroup feels that the company will not revise its financial targets for the next quarter, which reflects the conservative outlook of the management. The positive indications, along with a Citigroup rating upgrade from “Hold” to “Buy” resulted in an increase in the share price in early hours of trading.