McDATA Announces Third Quarter Fiscal Year 2006 Financial Results.

BROOMFIELD, Colo. -- McDATA Corporation (Nasdaq: MCDTA)(Nasdaq: MCDT) today reported results for the third quarter (Q3 06) ended October 31, 2006. Net revenues for Q3 06 totaled $156.1 million, compared to $150.1 million in the second quarter of fiscal year 2006 (Q2 06) and $168.5 million in the third quarter of fiscal year 2005 (Q3 05).

The net loss for Q3 06 on a generally accepted accounting principles (GAAP) basis was ($26.3) million, or ($0.17) per share basic and diluted. This compares to a GAAP net loss of ($20.5) million, or ($0.13) per share basic and diluted in Q2 06, and a GAAP net loss of ($7.5) million, or ($0.05) per share basic and diluted in Q3 05.

Non-GAAP net loss for Q3 06 totaled ($4.3) million, or ($0.03) per diluted share. This compares to non-GAAP net income of $1.2 million, or $0.01 per diluted share in Q2 06, and non-GAAP net income of $3.6 million, or $0.02 per diluted share in Q3 05.

McDATA's non-GAAP net income excludes charges related to the amortization of purchased intangible assets, certain restructuring and/or severance costs, amortization of debt discount, and the impact of stock compensation expense following the adoption of SFAS 123R beginning Q1 06. In addition to the exclusions listed above, McDATA's Q3 06 non-GAAP net income excludes charges related to the proposed acquisition by Brocade. McDATA's Q2 06 non-GAAP net income also excludes charges related to the impairment write down of a single product line and separate note receivable, both obtained in the CNT acquisition. McDATA's Q3 05 non-GAAP net income also excludes amortization of deferred compensation. Non-GAAP results are a supplement to GAAP financial statements and exclude certain expenses to provide what McDATA believes is a more complete understanding of our underlying operational trends. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. A reconciliation of GAAP and non-GAAP net income is provided in the financial statements attached to this news release.

Q3 06 Business and Customer Highlights

* Achieved professional services milestone of 300+ data center relocations

* Introduced i10K Xtreme, the first director with Open VSANs, non-disruptive 4 Gb/s configuration capabilities, SAN LPARs for total SAN isolation, and Open Trunking for optimized performance between directors and switches

* Released Enterprise Fabric Connectivity Manager (EFCM) 9.0, bundling and building upon three previously separate McDATA management applications to create one very powerful, heterogeneous storage network management platform

* Announced availability and major bank customer for McDATA's Virtual Tape Library (VTL), a disk-to-disk-to-tape solution that enables efficient backup leveraging both disk and tape media

* Launched McDATA Virtualizer, the first in a series of Advanced Fabric Services offerings on the Application Services Module (ASM) platform

* McDATA, Fujitsu Siemens Computers, and Decru, a NetApp company, integrated Fujitsu Siemens Computers' CentricStor[TM] Virtual Tape Appliance with McDATA's high performance Edge3000 Storage Routers and Decru DataFort[TM] storage security appliances creating a joint wide-area replication solution designed to simplify the backup process and improve security for tape vaulting

Conference Call and Webcast

McDATA will host a conference call to discuss Q3 06 financial results today, November 30, 2006, at 3 p.m. MDT. To participate in the conference call, dial 706-679-8352. The conference call will also be webcast live at www.mcdata.com.

About McDATA (www.mcdata.com)

McDATA (Nasdaq: MCDTA)(Nasdaq: MCDT) is the leading provider of data access 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 - such as the Intrepid 10000 Director, 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.

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Note (1) - Certain prior period amounts have been reclassified to conform to the fiscal 2006 presentation.

Note (2) - The condensed non-GAAP consolidated income statements for all periods presented are for illustrative purposes only and are not prepared in accordance with generally accepted accounting principles.

The following is provided as a supplement to the non-GAAP reconciliation above:

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