Wednesday, May 27, 2015

Seeking Alpha: Brocade On Better Footing, But It Won't Be Getting Easier

A year ago I advised patience with Brocade (NASDAQ:BRCD), as I thought the Street was too bearish on the company's prospects for retaining high-margin SAN business and building up its IP networking operations. While the storage challenges are not going away, the company should be in position to benefit from the growing rift between EMC (NYSE:EMC) and Cisco (NASDAQ:CSCO) and growing deployments of all-flash arrays. On the networking side, the VDX line is doing well and the company is assembling a cogent collection of SDN/NFV pieces, but it remains to be seen if the company can grow share and monetize that opportunity.

With the shares up more than 40% over the past year, I'm calling it a day on the Brocade undervaluation call. Management has done a very commendable job with execution (particularly on margins), but now the questions are shifting more towards the company's real growth prospects and I'm not quite as confident about those as I was on the undervaluation a year ago. There are indeed opportunities for Brocade to outperform, but I need a better mix of growth and value here before getting more bullish.

Read the full article here:
Brocade On Better Footing, But It Won't Be Getting Easier

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