Market Gems:Stocks w/Strong Earnings and High Tech. Rank Message Board

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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: Jenna who wrote (112032)	8/17/2000 9:06:47 PM
From: puborectalis	of 120523

MCDT......."THE POSSIBLE FAVORITE The company that many analysts point to is Brocade Communications (Nasdaq: BRCD), which offers smaller and more affordable solutions, as compared to McData's more mainframe-type systems for the larger, global data users. Brocade went public in May 1999 and, like McData had a strong showing, with a 138 percent opening-day gain. Investors have continued to embrace the company. Brocade now is trading at $202.50, nearly 1700 percent above its first day close. While the fantastic growth of Brocade should not be seen as the definite pattern that lies ahead for McData, it does offer some insight into the demand for these types of storage products -- especially as the Internet continues to take the place of the more traditional paper-based or early data-storage systems. According to Bill Lewis, an analyst for Chase H & Q in San Francisco, Brocade and McData are two of the leading players in their respective switching solutions. He views McData's break with EMC as an opportunity for the company to fully realize its potential to capture original equipment manufacturers (OEMs) outside the umbrella of EMC's customer base, which accounted for nearly 70 percent of McData's revenue in 1999. But investors will need to keep an eye on EMC's relationship to McData in the coming months both to learn when the share distribution might occur and to see how much revenue still is coming from EMC. Though McData is by no means a tech upstart -- the company has been around for 20 years and is actually profitable -- the stock appears to be already approaching what some would say fully valued. Shelby Seyrafi, a hardware analyst with A.G. Edwards in St. Louis, feels that a fair valuation for McData is one that values the company at about half the size of Brocade, which has a market cap of $22 billion...."

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