Brocade CEO Klayko resigns despite stellar Q3 figures

Long-serving leader to depart shortly as vendor announces tasty top- and bottom-line rises in third fiscal quarter

Brocade chief executive Michael Klayko has announced his resignation from the firm after seven years at the top, just as the vendor posted a stellar set of Q3 numbers.

Klayko will remain in place until a successor is identified and, to this end, the Brocade board has set up a search committee and plans to use the services of an executive recruitment company. No specific information was given on why the outgoing chief is departing, or where he might surface.

"Decisions such as these are never easy, but I believe it is the right time," said Klayko. "The company is in a great position financially, and our product pipeline will continue to strengthen and clearly separate Brocade from other networking providers."

Brocade chairman Dave House added: "We want to thank Mike for his more than seven years of service as CEO. He has led us through two major acquisitions and has positioned us as a technology leader and world-class provider of networking solutions."

For its third fiscal quarter, which closed on 28 July, the storage and networking firm saw sales rise 10.3 per cent annually to $555m (£353m). Operating profit more than doubled, standing at $70m. Operational margins in Q3 were 12.6 per cent, compared with 6.8 per cent in the corresponding period last year.

Storage revenue spiked 13 per cent year on year to $377.6m. Since its buyout of Foundry Networks in 2008, Brocade has admitted in the past that networking sales have lagged behind what it expected. But in Q3 FY12 its Ethernet business posted a five per cent bump in revenue, with sales reaching $177.8m.

The vendor was particularly reliant on OEM revenue in Q3, as it represented 67 per cent of the top-line total, with channel and direct sales providing 33 per cent. This compares with a ratio of 61 to 39 per cent in the year-ago quarter.

Klayko (pictured) said: "Fiscal Q3 was a great quarter for Brocade. With continued differentiation in our products and focused execution across our organisation, we were able to overcome many issues in the current challenging macroeconomic environment. As a result, our financial performance in the quarter exceeded our expectations for revenue, operating margin and earnings per share."