George,
Thanks for the link, it is a must read if you care about the technology. Having a worthy competitor like Brocade around certainly does help validate the technology.
I'm going to reiterate this one time and then I will drop it.
Venture capitalists just picked up 20M worth of Brocade, valuating them at $120M. This is cash, handed over by smart money, presumably at a substantial discount from Brocade's real worth.
Brocade and Ancor are roughly the same size. Ancor, being located in a high rent district of a relatively low rent state will remain less expensive to operate than Brocade. Ancor arguably has the better of the switches, and of course are not resting on their laurels anymore than Brocade is resting on theirs.
Granted Brocade has more revenues at the moment, primarily due to Sequent but looking on the horizon, I see a large market for both companies and I don't see either claiming more then 1/2 the market a year from now.
With this in mind, at 5 1/4, you have an opportunity to pay roughly 1/2 for Ancor on the open market that VC's paid for Brocade.
When Brocade goes public next year, do you think Brocade would like Ancor to have a small market cap, or a high one? I submit to you that they would like to be able to point to Ancor and say "they have a market cap of 250M, and we have twice the revenues in the trailing twelve months." 15-20 OEMs to be shared? More on the way?
Tax selling and shady brokerage liquidations will pass. Large storage OEMs will come to pass.
Steve |
