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Networking Solutions Provider Brocade May Be Up For Sale

Networking Solutions Provider Brocade May Be Up For Sale

Networking solutions and management applications provider Brocade Communications Systems (www.brocade.com) is seeking a buyer, according to a Bloomberg News report.

An unnamed source familiar with the matter told Bloomberg that Hewlett-Packard (www.hp.com) and Oracle (www.oracle.com) could be interested in buying Brocade, which could be the next company in the data storage industry to be acquired in an already busy year for mergers and acquisitions. Earlier this year, Oracle bought Sun Microsystems (www.sun.com), EMC (www.emc.com) bought Data Domain (www.datadomain.com). According to a report from Barron's, rumors are also circulating about integrated data storage solution provider NetApp (www.netapp.com) being up for sale.

In an effort to bulk up its offerings to better compete with rivals such as Cisco Systems (www.cisco.com), Brocade bought switching, routing and traffic management solution provider Foundry Networks (www.foundrynet.com) last year for about $3 billion. Now possibly in the position of a seller, rather than a buyer, Brocade's stock price has rapidly risen as the M&A rumor hit the market, despite a disappointing third-quarter loss on revenue growth of 35 percent reported in August.

Last month, however, Brocade reported an optimistic annual earnings forecast of as much as $2.45 billion for the fiscal year ending in October 2010, anticipating a rise in network upgrades from customers who delayed network investments during the recession.

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