QLGC vs. BRCD
Hi, I have posted this on two boards that I follow and have not gotten much of a response. Maybe someone here would care to comment. If so, thanks!
BRCD vs. QLGC
I have come to the initial conclusion that qlgc would be a better investment than brcd at this time, but I do have some reservations based on the following:
BRCD supposedly has 90% of the Fibre Channel market (one that is still growing at a tremendous rate which allows room for many competitors) and is definitely recognized as the industry leader - therefore giving it a market cap 4 times that of qlgc when its revenues are approximately only 75% of qlgc and its earnings are only approximately 30% of qlgc. (Granted the projected earnings growth rate of brcd is much greater - for the next two years at least - than that of qlgc.)
If you look at the charts of ntap, emc, brcd, qlgc, and ancr, you will notice that qlgc is the only one that has not recovered from Spring sell off. This represents an opportunity, but also shows that the market feels qlgc is a second tier company in this budding industry.
If you look at qlgc and its merger with ancr, IMO, this entity should not be viewed as second tier (as the market currently values it.) Therefore, if the market reevaluates its assessment of the qlgc merger with ancr and views it as creating more competition for brcd, then the market may give qlgc a value closer to that of a first tier company. Which would probably double or triple its current market cap.
Now, my analysis has been quick and I only have a basic understanding of the specific technologies and competitive relationships between the companies, so I would like to hear any opinions out there on what I have said.
Thanks a lot!
Paullie |
