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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Techplayer who wrote (16602)	12/13/2002 10:31:39 PM
From: Rock_nj	Read Replies (1) \| Respond to of 57110

Yes, I did come across that story regarding problems with the Rhapsody/Brocade deal, since BRCD has dropped so much since the deal was announced. Perhaps they'll just make it a pure cash offer, or throw in some extra cash to keep the Rhapsody venture capitalists happy. I think that deal is a winner for Brocade in the long run and will be reflected positively in their stock price next year. Even if the deal falls through, it should help BRCD's stock, since it will mean less dilution of their shares. Did you hear about all the buying of BRCD DEC $5 calls today? Definitely, keep an eye on this stock. One to watch and trade. Schaeffer's Market Observation Features BRCD PR Newswire - December 13, 2002 15:56 CINCINNATI, Dec. 13 /PRNewswire/ -- Today's Market Observation features Brocade Communications Systems (Nasdaq: BRCD). Schaeffer's Market Observations are market-based reports that provide insight and analysis from a unique and unbiased perspective. Market Observations are published on www.SchaeffersResearch.com -- the home of Bernie Schaeffer and Schaeffer's Investment Research. To receive a free email notification each time a new commentary is written about one of the featured stocks or any of your favorite stocks, click on the following link: www.schaeffersresearch.com/addinfo . Calls Pervade on Brocade Options players have been scrambling to snatch up Brocade Communications Systems (Nasdaq: BRCD) calls this afternoon. The equity has seen more than 33,400 contracts cross the tape at its December 5.00 call. The majority of the volume changed hands in a number of large blocks closer to the ask price. It's pretty safe to say that these options represent the initiation of a sizable new position, as open interest prior to today's trading sat at only 9,988 contracts. Optimism toward the security has been rampant. BRCD's Schaeffer's put/call open interest ratio sits at 0.50, with calls doubling puts in the front three months of options. This reading is lower than 70 percent of those taken over the past 52 weeks. In addition, the number of BRCD shares sold short plunged 31 percent over the most recent reporting period to 10 million shares. At the equity's average daily trading volume, all the short positions can be covered in less than a day of trading. This considerably reduces the chances of a short-covering rally boosting the shares higher. Only Wall Street has turned its back on the infrastructure provider. According to Zacks, one analyst rates it a "buy," 11 rate it a "hold," and eight rate it a "sell." From a fundamental perspective, the company has met the Street's earnings estimate for the past four quarters. BRCD is expected to report earnings on February 2 and the current estimate is for two cents per share. For the same period a year ago, the firm reported a profit of five cents per share. Technically speaking, the security continues be capped by its declining 10-week moving average. BRCD has not enjoyed a weekly close above this intermediate-term trendline since February.