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Technology Stocks : Brocade Communications Systems,Inc. (Nasdaq-BRCD)
BRCD 12.730.0%Nov 20 4:00 PM EST
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To: Lizzie Tudor who wrote (1545)4/30/2004 2:42:05 PM
From: E_K_S  Read Replies (2) of 1583
 
Brocade is a pure play for the "virtural" next generation switch but CSCO has a broader portfolio of products and technology. I like CSCO a lot but the stock price is not cheap relative to the number of shares outstanding and their earnings. The way the Brocade price is acting with it's recent sell off seems to indicate that they may warn or miss on earnings. It's a very competitive industry and CSCO recently entered this market with their "virtual" storage switch. Although the market is growing, there are more vendors in this space now. I suspect that CSCO may be gaining market share at the expense of the other manufactures.

McData warned last quarter of some what slower sales and revenue growth but it was not apparent if this was a company specific problem or rather a loss in market share to Brocade and/or CSCO. I also noticed that margins were falling for vendors especially in the legacy SAN switch products.

I own just enough Brocade to keep me interested in the technology and do try to follow the industry trends. I think we will have a better idea of how these next generation "virtural" switches perform in generating new sales over the legacy products as the year progresses. It's really a function of the cost per port and flexibility of the switch (you can program the "virtural" switch real time over the network).

Hope this helps.

EKS
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