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Technology Stocks : McData (MCDT) -- Ignore unavailable to you. Want to Upgrade?

To: Douglas Nordgren who wrote (20)	8/11/2000 2:37:00 PM
From: Gus	Read Replies (1) \| Respond to of 234

Do you think McData owners may someday end up holding shares of Brocade? I wouldn't be at all surprised to see BRCD buy up MCDT Somehow I doubt that, Douglas. Mcdata has an 18-year track record as a reliable vendor to the data centers and an installed base of 700,000 data-center ESCON/FICON/FC ports. For perspective, note that the entire FC hub and switch market in 1999 consisted of only 500,000 ports. Its RTOS-based EFC SAN management software is already designed into EMC's ControlCenter and IBM/Tivoli's GEM (Global Enterprise Manager), and it provides specialized backbone support to both IBM Global Services and EMC Global Services. Mcdata also has a 5-year OEM agreement with EMC and a 5-year Reseller agreement with IBM. Incidentally, both IBM and EMC recently revised their 1999 licensing agreement by reworking some disk drive supply provisions and extending the term for 5 years. There are pass-through rights that accrue to Mcdata, as part of EMC, until EMC completely spins it out. Lastly, there is a tax-sharing agreement between Mcdata and EMC that effectively precludes anybody from buying Mcdata without EMC's waiver of its rights to match any and all proposals for up to 27 months after the Mcdata Class A shares are fully distributed to EMC shareholders. Brocade needs Mcdata's director switch technology more than Mcdata needs Brocade's current ASICs technology, which is covered by the current contract anyway. Besides, Mcdata already indicated that they are currently testing their next generation fibre channel ASICs and directors which should be ready for next year's procurement cycle. Keep in mind that Mcdata designed the ASICs and director switch for ESCON, the original SAN environment, with IBM as the exclusive customer. It also recently designed the FICON bridge card and switch ASICs that are just starting to sell to IBM's large ESCON base so the ASICs should be no problem at all.