Who Has Designs on Brocade?
Watch the Video… Storage technology companies have been big winners this year, their stocks buoyed by the battle for Data Domain, which EMC (EMC), the No. 1 maker of storage computers, acquired in July for $2.1 billion after outbidding NetApp (NTAP). “Storage is still a growth industry, and this deal signals more consolidation ahead,” says Chris Haroun, CEO of Haroun Capital Management, which owns shares. He believes one company that is an attractive target is Brocade Communications (BRCD), which makes data storage networking products for the high-end Ethernet market, where it has a 70% share. Brocade would make a great acquisition for IBM (IBM) or Hewlett-Packard (HPQ), especially since Cisco Systems (CSCO), with 65% of the lower-end Ethernet market, “has moved recently to compete with the two companies in the server market,” says Haroun. IBM, EMC, and HP account for 65% of Brocade’s sales. Cisco is losing share in Brocade’s core market, he notes. Brocade stock has bolted to 7.89, up
