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Brocade once again for sale?

Lucas Mearian | Oct. 31, 2011
According to a published report, Brocade is again making it known that it has placed itself on the selling block, hoping to drum up interest in suitors with enough money to cover its more than $2 billion market cap.

Over the past few years, Brocade's stock price has taken a couple of huge cliff dives. In September 2008, the stock fell from $7.49 a share to $3.09 in October. It ended up at a low of $2.16 a share in March 2009 before rebounding to $9.41 by October 2009.

Then, earlier this year, the stock again almost halved in price in a matter of a month, from $6.75 a share in July to $3.42 in August. The stock has since steadily climbed its way to just above $4.50.

Still, any potential suitor would have to be of substantial size. Brocade has a market capitalization of about $2.2 billion.

Oltsik said Brocade also still has a lot of debt from its purchase of Foundry, so any company purchasing it would also incur that debt.

EMC may be interested in Brocade, but that deal would be a long shot, according to Oltsik. EMC does not have an application server business, and Brocade's Foundry unit would be useless to them. An EMC purchase of Brocade would also strain its relationship with Cisco, Oltsik said.

"I just don't see it. I just don't see a scenario where someone buys Brocade," Olstik said.


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