UPDATE 2-Brocade first qtr trumps estimates; shares rise
* Q1 adj EPS $0.20 vs est $0.13
* Q1 rev up 3 pct at $561 mln vs est $542.4 mln
* Shares rise 7 pct after hours
Feb 21 (Reuters) - Storage gear maker Brocade Communications Systems Inc reported better-than-expected quarterly results, helped by a rise in sales of its storage equipment products, but concerns loomed over its ethernet business.
Shares of the San Jose, California-based company, which have rebounded more than 80 percent since their August 2011 lows, jumped 7 percent to $5.85 in after-hours trading on Tuesday.
Revenue rose 3 percent to $561 million in the quarter. Sales from the company's storage segment, which brings in about 70 percent of its total revenue, grew 4 percent to $406.4 million.
However, the ethernet sales are a concern, analyst Edward Zabitsky of ACI Research said. Sales in the ethernet business fell 18 percent sequentially, hurt by softness in federal sales and lower enterprise revenue.
"They are very dependent on the U.S. economy, which is doing better. They have the right strategy but we're in a risky environment," Zabitsky said and added the company was also facing a lot of pressure from rivals like Cisco Systems .
For the first quarter, the company posted a net income that more than doubled to $59 million, or 12 cents a share. In the year-ago quarter, profit was $27 million, or 5 cents a share.
Last month, Reuters reported the company had received first-round bids from a handful of potential buyers and hired Frank Quattrone's Qatalyst Partners to focus on a deal that could result in a leveraged buyout.
Shares of Brocade, whose current sale process is the third since 2009, closed at $5.50 on the Nasdaq.
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