Seeking Alpha: A Beat's A Beat, But Brocade Still Needs More Growth

Tuesday night had to be satisfying for Brocade (BRCD) shareholders. The stock has been strong over the past three months (up almost 40%) despite a twitchy Nasdaq and at least two downgrades to "Underperform," and Brocade topped that off with a beat-and-raise fiscal third quarter.

Brocade is already making clear progress on its efforts to restructure and reduce operating costs. What's less clear is the growth trajectory of its storage and IP networking businesses. Better than expected performance in storage is encouraging, and predictions of the rapid demise of this business are likely premature, but the IP networking business still has a ways to go. All of that said, Brocade shares still appear quite cheap on a discounted cash flow basis - if the company can preserve or rejuvenate the storage business and find a better match between its IP networking technology and its targeted customer verticals, these shares could still do quite well from here.

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A Beat's A Beat, But Brocade Still Needs More Growth