While many took the leak bait and assumed Brocade Communications Systems would be acquired imminently, others took a step back and analyzed the situation with clear-eyed detachment.
Reasoned analysis and cold logic suggest that Brocade might well be in play, for multiple reasons, but that finding a buyer willing to pay an attractive price will be difficult. In fact, for reasons I have adduced previously, one could easily contend that Brocade probably won’t be acquired in the near term.
Ittai Kidron, a market analyst with Oppenheimer and Co., has reached a similar conclusion. He has downgraded Brocade’s shares, saying he doesn’t see a buyer for the company on the immediate horizon. Kidron also has doubts about the company beating market expectations with its forthcoming quarterly results.
With no acquisition pending, and its current stock price inflated by the hot air of feverish takeover talk, Brocade would have to do particularly well in the quarter — and with forward guidance — to justify its higher market valuation.
Like Kidron, I just don’t see a buyer in Brocade’s immediate future. Situations change and markets are dynamic, but the companies mentioned as potential Brocade acquirers — HP, Oracle, Dell, Juniper, IBM — just aren’t ready, willing, or able to take the plunge at this particular juncture.
Twilight in the Valley of the Nerds 