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Technology Stocks : Son of SAN - Storage Networking Technologies -- Ignore unavailable to you. Want to Upgrade?

To: J Fieb who wrote (4261)	12/18/2001 2:03:49 PM
From: stockman_scott	Read Replies (1) \| Respond to of 4808

13:41 ET CSFB on Brocade/McDATA : Sources at CSFB telling us the firm is cautious on McDATA (MCDT) and Brocade Communications (BRCD) -- hearing that Hitachi has plans to enter the SAN switching market in 2H02.

To: J Fieb who wrote (4261)	12/18/2001 3:41:41 PM
From: Gus	Respond to of 4808

Rainy days ahead for Brocade. I think that's why they need the money. The 12000 is in a technical quagmire and the fate of this first generation large switch is increasingly in the hands of a few OEMs whose relationships with Brocade are increasingly marked by friction. And its software ambitions remain just that, ambitions. Here is a Gartner survey of SAN Management software. Brocade doesn't even show up on this list. As with any hot market, all storage software vendors quickly labeled their products as SAN management products if they could in any way support storage connected via Fibre Channel. But Gartner Dataquest's definition of SAN management is more narrow and focuses on the products that manage the Fibre Channel network devices and the paths to the storage attached to those networks. SAN Management Products as of November 1, 2001 Product/ Est. Number of List List Current Customers Price Price Version (as of 8/1) Unix NT HP OpenView Storage Area Manager 2.0 45 $274,000 $ 90,000 Veritas SanPoint Control 2.0.1 65 $524,000 $ 32,000 EMC ESN Manager 2.0 ControlCenter 5.0 8,500 $101,000 $ 41,000 IBM Tivoli Storage Network Manager 1.1 150 $3.4M $ 31,000 McDATA SANavigator 2.1 25 $120,000 $ 29,000 BMC Patrol Storage Network Manager (With Knowledge Manager module) 15 $234,000 $ 45,000 Compaq SANworks Network View 2.0 50 $ 41,000 $ 16,000 Vixel InSite Professional 3.5 2 $ 24,000 $ 8,000 1 Price shown is for nine NT servers and 32 ports on a 1TB SAN. 2 Price shown is for 50 Unix servers and 256 ports on a 10TB SAN. 3 ESN Manager is an evolution of EMC's Volume Logix product for access control, which had a large installed base. Those customers were migrated to ESN Manager. gartner.com

To: J Fieb who wrote (4261)	12/18/2001 5:09:46 PM
From: D. K. G.	Read Replies (1) \| Respond to of 4808

Brocade to Raise $500M in Bond Offering byteandswitch.com Brocade Communications Systems Inc. (Nasdaq: BRCD - message board) announced Tuesday that it intends to raise $500 million by selling a convertible bond to institutional investors, due to be paid 2007 (see Brocade to Offer $500M in Notes). The interest rate, conversion rate, and offering price must still be set. The offer is due to close this month, and Brocade will grant the initial purchasers a 30-day option to buy an additional $50 million worth of notes. Analysts say the interest rate on the bond will probably be fairly low, between 1.75 and 2.25 percent. The debt offering was seen as a red flag by Wall Street, where initial reaction to the news prompted a sell-off of Brocade’s stock. The share price dropped 4.05 percent to $33.61 by midday on the Nasdaq. Brocade said in a statement that it will use the proceeds for general corporate purposes, including working capital and capital expenditures. Under closer scrutiny however, it would seem that Brocade has more up its sleeve for this cash than just working capital. ”They have over $250 million in cash versus almost no debt and are free cash-flow positive, so working capital and capex are not valid reasons,” says Dan Renouard, vice president of research at Robert W. Baird & Co. Inc. ”The only logical thing we can conclude is that an acquisition is either in the works or soon to be in the works -- that may have to include cash as a component,” Renouard asserts. So what does Brocade need? [Ed note: apart from a sense of humor! -- see Greg Reyes, Chairman and CEO, Brocade and Brocade CEO in Tick-Top Form.] ”If [Brocade] is looking toward an acquisition, it has no iSCSI or InfiniBand products yet, which are significant holes in the portfolio,” says Harsh Kumar, storage analyst at Morgan Keegan & Company Inc. Other analysts say that incurring debt to make an acquisition is very risky, and Brocade is more likely to use its stock to buy companies, given its high valuation. That the company is not apparently doing so seems significant to some sources. “[The bond offering is] more of a defensive move,” says one Wall Street analyst who declined to be named. “Brocade might be looking at operating losses, and this puts cash on its balance sheet.” There are signs that Brocade insiders are less than bullish on the future of the company's stock. According to SEC filings this month, Brocade CEO Greg Reyes plans to sell 250,000 shares for $9.2 million. He has filed to sell $100 million in stock over the last year. VP of strategy Paul Bonderson is selling 50,000 shares for $1.9 million, and the new CFO, Antonio Canova, plans to sell 30,000 shares for $1.1 million. — Jo Maitland, Senior Editor, Byte and Switch byteandswitch.com