SAN FRANCISCO, Feb 13 (Reuters) - Shares of Brocade
Communications Systems Inc. (NASDAQ:BRCD) fell to a three-year low
on Thursday on concerns that the data storage networking
company is losing market share to a rival, and looming
competition from industry leader Cisco Systems Inc.
McData Corp. (NASDAQ:MCDT) is making headway against Brocade
with its Sphereon switch, said U.S. Bancorp analyst Ashok Kumar
in a note to clients on Wednesday. Citing a lack of
profitability and the coming threat from Cisco (NASDAQ:CSCO), Kumar
cut his price target on the stock to a range of $4.50 to
$6.00.
Shares of Brocade fell as low as $3.85, before trading down
37 cents, or 8.71 percent, at $3.88 early Thursday afternoon on
Nasdaq. The shares have lost more than 80 percent of their
value in the past year.
Cisco is already selling its high-end switch used in
storage networks to some customers, analysts said. The product
should start generating more revenue within the next six
months, likely at the expense of Brocade and its high-end
Silkworm 12000 switch, they added.
Brocade dominates the mid-range market for switches that
tie together storage networks, and has been trying to take on
McData at the higher end with Silkworm.
The concerns about Brocade heightened after the San Jose,
California-based company late on Wednesday posted a fiscal
first-quarter loss due to charges for job cuts as revenue was
unchanged.
"There are a lot of howitzers pointed at those guys," said
Steve Duplessie, senior analyst at market research firm
Enterprise Storage Group. "It's not going to get easier for
them." |
