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

To: Douglas Nordgren who wrote (210)	3/4/2001 5:34:40 PM
From: Gus	Read Replies (1) \| Respond to of 234

Thanks for the additional color, Douglas. It now appears that the quid pro quo for Brocade signing up with EMC's Data General unit for product support in late 1999 was EMC's qualification of Brocade switches for departmental and workgroup applications in early 2000. Have you heard anything on McData's 2-Gig? MCDT has a product announcement later this month and they indicated that by 3Q2001, they will upgrade all their switches from 1 Gbps to 2 Gbps -- 8-port, 16-port, 32-port and 64-port -- in addition to rolling out a 128-port director. The transition from 1 Gbps to 2 Gbps requires optical cabling so that may take happen more slowly in the enterprise market than in the service provider market, as you pointed out. And when is HP announcing that MCDT OEM, or did I miss it? When MCDT launched a new branding initiative in early January to support their reseller partners, they hinted that HWP was already using McData switches under their own badge. That was before the formal announcement last month so I think HWP will start to show up in MCDT's results. Regarding potential slippages, I also think Brocade is behind schedule on their 64-port integrated fabric and 2 Gbps switch/directors. They're still beta-testing their large fabrics with the prewired chassis. McData made their prewired 39u chassis (up to 4 can be railed together and manged as one in less than 4 data center tiles) available to its resellers last October. I think their new switches and directors will miss this year's procurement cycle. Heard any dirt on Compaq and Brocade? Brocade's storage software strategy seems to be on a slow-motion collision course with Compaq's storage software strategy. Compaq did $200M in storage software sales last year and they're rolling out Versator later this year in conjunction with IBM's Storage tank.

To: Douglas Nordgren who wrote (210)	3/8/2001 1:13:29 PM
From: Gus	Read Replies (1) \| Respond to of 234

....There is still some bad blood between BRCD and EMC and I don't think EMC would be sympathetic to a BRCD buy-out. Besides, the cultural differences, I have been told, are almost too vast to overcome. A hostile is therefore out of the question, BRCD can't risk talent walking out the door..... From the 10K released 3/2/2001, it looks like the tax sharing agreement and the accompanying restrictions expire on May 2003 -- or 27 months after February 2001. The 2-year non-compete agreement ends on August 2002, but McData will always be able to recruit scarce technical talent more aggressively with options than a behemoth like EMC and McData has a very significant installed base in first generation SANs (ESCON/FICON) and second generation SANs (Fibre Channel) so I think the relationship has a good chance of continuing through succeeding generations of SAN technology. RISK RELATED TO OUR RELATIONSHIP WITH EMC Under the terms of the Tax Sharing Agreement between EMC and us, until 27 months after the date of EMC's distribution of our Class A common stock indirectly held by it to its stockholders, we may not, *without the consent of EMC* or the receipt by EMC of a private letter ruling from the Internal Revenue Service that the tax treatment of the distribution will not be adversely affected: - enter into any transaction that would result in any person acquiring a 50% or greater interest in us; - take or fail to take any other action which would cause the distribution to be taxable to EMC stockholders; - issue stock or other equity interests in us, or redeem or repurchase any of our capital stock which would involve the acquisition by one or more persons of more than 35% of our stock; or - undertake any transaction which would be treated as a liquidation or reorganization for tax purposes. These restrictions may prevent us from being acquired, either in a negotiated transaction or otherwise, from using shares of our common stock as payment in the acquisition by us of other companies or from financing our operations through sales of securities........ It also appears that they completed the financing for their global headquarters. The financing contains restrictions on about $60M of McData's $368M in cash and marketable securities. From the 10K .........On February 9, 2001, we entered into a lease and associated agreements with Deutsche Bank AG, New York Branch ("Deutsche Bank") for the lease of a 167,000 (approx.) square foot multi-story office and engineering building to be constructed on a 109 acre parcel of land located in Broomfield, Colorado. For further information on the lease, please see "Item 2. Properties" in the Annual Report. Construction must be completed no later than February 2003. As part of the transaction, we have guaranteed a residual value of the facility to Deutsche Bank of approximately 85% of the total original cost. We have agreed to restrict up to $60 million (plus 5 percent) of our investment securities as collateral for specified obligations of ours under the lease. These investment securities are restricted as to withdrawal and are managed by a third party subject to certain limitations. In addition, the lease agreement requires that the Company maintain compliance with certain affirmative and negative covenants, representations and warranties, including certain defined financial covenants. Groundbreaking ceremony..... The first building of the new campus will be 168,000 square feet. It will house McDATA's engineering, research, integration and development lab, information technologies and data center department focused on the development of high-availability enterprise-class open storage networking hardware and related software used to connect servers and storage systems in corporate storage area networks (SANs). The completion of the first building is scheduled for May 2002. biz.yahoo.com