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Technology Stocks : Brocade Communications Systems,Inc. (Nasdaq-BRCD) -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (1310)	1/15/2003 8:21:45 PM
From: Lizzie Tudor	Respond to of 1583

well, near term meaning next few mos I was hoping for high single digits, maybe 9 or so based on completion of rhapsody merger and revs at 125mm in the call, maybe a little upside but not a blowout (which I think is unlikely). Longer term its more difficult, Gartner and some other research firms have SANS total market at 4 billion in 2006 timeframe so substantial upside but how to account for cisco entering the business? Also I don't know how iSCSI fits into their estimates. Additionally I am of the belief that demand is artificially depressed for technology and capex so this 4 billion estimate may well be too low. And it is unlikely that brocade can maintain his mkt share which last I looked was in excess of 50%. I'm going to drop brcd mkt share down some but still assume growth so say revs at 200mm/qtr+ in the coming years and assuming decent margins I can see brcd in the 20s, assuming they get all their product issues worked out. The issue outstanding is war which really has a lid on everything for now imo and brcd product issues which I am assuming will be remedied with Rhapsody, but I really don't know that. Also I have to see how Reyes manages expenses this quarter, the estimates are zero earnings but can he bring in a penny or two? Is this vague enough for you? LOL The problem is I'm not too up on hardware and I consider brocade to be a firesale purchase so even though I don't know the competitive position of all the players how can you go wrong buying at these levels? So far so good, brcd walking right up there and some of the issues that existed in the past are gone like the rhapsody question. Lizzie

To: E_K_S who wrote (1310)	1/16/2003 10:38:31 PM
From: E_K_S	Respond to of 1583

It appears that Brocade does generate some "Service Revenues" but at this time it is not significant. From Brocade's most recent 8K report: "...Service Revenue . Service revenue, which to date has not been material, consists of training, warranty, and maintenance arrangements, including post-contract customer support (PCS) services. PCS services are offered under renewable, annual fee-based contracts or as part of multiple element arrangements and typically include upgrades and enhancements to the Company’s software operating system, and telephone support. For multiple element arrangements, the Company allocates revenue to each element based upon vendor-specific objective evidence (VSOE). VSOE for each element is based upon the price charged when the element is sold separately. Service revenue, including revenue allocated to undelivered elements, is deferred and recognized ratably over the contractual period, which is generally one to three years. Training revenue is recognized upon completion of the training..." ========================================================== I suspect this could be a growing component of their revenue in the long term, especially as they expend their reseller agreements. For many other IT (hardware/system) companies, this type of revenue can be as much as 20%-30% of total revenues. It could become significant if they expand their software license component. The key thing I will be looking for is upon the completion of the Rhasopdy merger if our management will explore the development of an enterprise management VSAN software suite product that could be licensed (for one time and reoccuring fees) to our resellers and their customers. EKS