Brocade on the block again?

Brocade on the block again?

If at first you don't succeed ...

Brocade is reportedly shopping itself around again, two years after failing to find a buyer the first time. According to The Wall Street Journal, citing "people familiar with the matter," Brocade rehired investment bank Qatalyst Partners to stoke interest in the company again.

Qatalyst was the same bank shopping Brocade around in 2009, the WSJ reports. At that time, Brocade denied it was for sale.

Brocade declined to comment for the WSJ.

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Brocade's market cap is $2.25 billion. The company's shares have fallen about 47% in two years.

It's unknown whether there are potential buyers for the company this time around, or who they might be. Dell's name came up numerous times in the past two years, but the company acquired networking rival Force10 recently.

Brocade's bread-and-butter, though, is FibreChannel storage area networks, where it is the market leader. Dell acquired iSCSI storage vendor EqualLogic back in 2007.

Brocade acquired Ethernet switch maker Foundry Networks in 2008 for $2.7 billion and an opportunity to broaden its addressable market and obtain a foundation technology for merging FibreChannel storage and Ethernet. The Ethernet switch market is six or seven times as big as the FibreChannel SAN market so Brocade's recently acquired Ethernet assets may be more valuable than the SAN business, the WSJ postulates.

Brocade has a 2% share of the $20 billion Ethernet switch market, according to Dell'Oro Group.

HP and Oracle were also mentioned as possible suitors for Brocade two years ago. Since then, HP acquired 3Com and has been struggling to integrate that company and with other internal matters, such as a revolving door to the CEO's office.

Oracle has said in the past it has no interest in Brocade. IBM and Juniper were also mentioned as potential buyers.

Cisco could have an interest in that the company is looking to become a broader IT player in the data center than just a networking leader. Acquiring Brocade's FibreChannel SAN installed base could further solidify Cisco's presence in the data center and accelerate its strategy to converge FibreChannel over its market-leading Ethernet switches.

But Brocade may be more attractive to a buyout shop, the WSJ speculates, and its sources say that some U.S. private-equity firms are expected to evaluate the company.

Brocade's annual revenue is $2 billion. The company is profitable, but earnings in its most recent quarter fell to $2 million from $23 million a year ago.

Read more about data center in Network World's Data Center section.

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Tags Mergers and acquisitionsbusiness issuesDellData Centerhardware systemscorporate issuesbrocadenetwork storageacquisitionsmergersConfiguration / maintenance


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