McDATA Announces Preliminary Third Quarter Fiscal Year 2006 Financial Results

  
    
  
  
    
      McDATA Corporation (Nasdaq: MCDTA)(Nasdaq: MCDT) today announced 
      preliminary results for the third quarter of fiscal 2006 (Q3 06) ending 
      October 31, 2006. McDATA expects to report net revenue for Q3 06 in a 
      range of $155 million to $157 million and diluted non-GAAP net income 
      (loss) per diluted share between ($0.04) and ($0.02). Non-GAAP gross 
      margin for Q3 06 is expected to be in a range of 40 percent to 42 
      percent. Non-GAAP gross margin for Q3 06 largely reflects a more 
      challenging sales environment. Non-GAAP operating expenses are expected 
      to be in a range of $71 million to $73 million.
    
    
      Commenting on the preliminary third quarter fiscal year 2006 results, 
      John Kelley, McDATA chairman, president and CEO, said, “I 
      am very proud of the McDATA team. We announced our agreement to be 
      acquired by Brocade eight days into our third quarter, and we will post 
      sequential revenue growth when we report final results at the end of the 
      month.” Kelley continued, “Our 
      higher-end product offerings showed particular strength this quarter, 
      with solid revenue contribution from our Fibre Channel director, 
      extension and FICON product offerings. Our services revenue also 
      increased on a sequential and year-over-year basis, with maintenance 
      revenue reaching an all time high.”
    
    
      McDATA's non-GAAP net income estimate for Q3 06 excludes acquisition and 
      severance related costs, charges related to the amortization of 
      purchased intangible assets, amortization of debt discount, and the 
      impact of stock compensation expense following the adoption of FAS 123R.
    
    
      All statements relating to the Company's third quarter fiscal 2006 
      financial performance are preliminary and are based on management's 
      initial estimates of operating results and may change based on the 
      Company's management and independent auditors completion of customary 
      quarterly closing and review procedures.
    
    
      McDATA will report final financial results for its third quarter fiscal 
      year 2006 on Thursday, November 30, 2006, after the close of market.
    
    
      About McDATA (www.mcdata.com)
    
    
      McDATA (Nasdaq: MCDTA)(Nasdaq: MCDT) is the leading provider of storage 
      networking solutions, helping customers build, globally connect, 
      optimize and centrally manage data infrastructures across SAN, MAN and 
      WAN environments. With nearly 25 years experience developing SAN 
      products, services and solutions, McDATA is the trusted partner in the 
      world's largest data centers, connecting more than two-thirds of all 
      networked data.
    
    
      Forward-Looking Statements
    
    
      This press release contains statements about expected future events that 
      are forward-looking and subject to risks and uncertainties. Readers are 
      urged to consider statements that include the terms "believes," 
      "belief," "expects," "plans," "objectives," "estimates," "anticipates," 
      "intends," "targets," or the like to be uncertain and forward-looking. 
      Factors that could cause actual results to differ and vary materially 
      from expectations include, but are not limited to, McDATA’s 
      relationships with EMC, IBM and Hitachi Data Systems and the level of 
      their orders, aggressive price competition by numerous other SAN and IP 
      switch suppliers, OEM qualification of our new products, integration of 
      CNT’s sales and marketing functions, 
      manufacturing constraints, constraints in obtaining third party product 
      for resale and other risk factors that are disclosed in McDATA’s 
      filings with the Securities and Exchange Commission. These cautionary 
      statements by McDATA should not be construed as exhaustive or as any 
      admission regarding the adequacy of disclosures made by McDATA. All 
      cautionary statements should be read as being applicable to all 
      forward-looking statements wherever they appear. McDATA does not 
      undertake any obligation to publicly update or revise any 
      forward-looking statements, whether as a result of new information, 
      future events or otherwise.
    
  
McDATA Corporation (Nasdaq: MCDTA)(Nasdaq: MCDT) today announced
preliminary results for the third quarter of fiscal 2006 (Q3 06)
ending October 31, 2006. McDATA expects to report net revenue for Q3
06 in a range of $155 million to $157 million and diluted non-GAAP net
income (loss) per diluted share between ($0.04) and ($0.02). Non-GAAP
gross margin for Q3 06 is expected to be in a range of 40 percent to
42 percent. Non-GAAP gross margin for Q3 06 largely reflects a more
challenging sales environment. Non-GAAP operating expenses are
expected to be in a range of $71 million to $73 million.

   Commenting on the preliminary third quarter fiscal year 2006
results, John Kelley, McDATA chairman, president and CEO, said, "I am
very proud of the McDATA team. We announced our agreement to be
acquired by Brocade eight days into our third quarter, and we will
post sequential revenue growth when we report final results at the end
of the month." Kelley continued, "Our higher-end product offerings
showed particular strength this quarter, with solid revenue
contribution from our Fibre Channel director, extension and FICON
product offerings. Our services revenue also increased on a sequential
and year-over-year basis, with maintenance revenue reaching an all
time high."

   McDATA's non-GAAP net income estimate for Q3 06 excludes
acquisition and severance related costs, charges related to the
amortization of purchased intangible assets, amortization of debt
discount, and the impact of stock compensation expense following the
adoption of FAS 123R.

   All statements relating to the Company's third quarter fiscal 2006
financial performance are preliminary and are based on management's
initial estimates of operating results and may change based on the
Company's management and independent auditors completion of customary
quarterly closing and review procedures.

   McDATA will report final financial results for its third quarter
fiscal year 2006 on Thursday, November 30, 2006, after the close of
market.

   About McDATA (www.mcdata.com)

   McDATA (Nasdaq: MCDTA)(Nasdaq: MCDT) is the leading provider of
storage networking solutions, helping customers build, globally
connect, optimize and centrally manage data infrastructures across
SAN, MAN and WAN environments. With nearly 25 years experience
developing SAN products, services and solutions, McDATA is the trusted
partner in the world's largest data centers, connecting more than
two-thirds of all networked data.

   Forward-Looking Statements

   This press release contains statements about expected future
events that are forward-looking and subject to risks and
uncertainties. Readers are urged to consider statements that include
the terms "believes," "belief," "expects," "plans," "objectives,"
"estimates," "anticipates," "intends," "targets," or the like to be
uncertain and forward-looking. Factors that could cause actual results
to differ and vary materially from expectations include, but are not
limited to, McDATA's relationships with EMC, IBM and Hitachi Data
Systems and the level of their orders, aggressive price competition by
numerous other SAN and IP switch suppliers, OEM qualification of our
new products, integration of CNT's sales and marketing functions,
manufacturing constraints, constraints in obtaining third party
product for resale and other risk factors that are disclosed in
McDATA's filings with the Securities and Exchange Commission. These
cautionary statements by McDATA should not be construed as exhaustive
or as any admission regarding the adequacy of disclosures made by
McDATA. All cautionary statements should be read as being applicable
to all forward-looking statements wherever they appear. McDATA does
not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.