Daily Archives: November 24, 2009

Brocade CEO: “I Never Was Actively Shopping the Company”

Every company worth its salt — and many others besides — has a contingency plan. The fact is, there’s a Plan A, there’s a Plan B, and sometimes there are Plans C, D, and E.

The world rarely conforms to our wishes, and we must adapt accordingly.

So, it’s no surprise that Mike Klayko, CEO of Brocade Communications, now proclaims that his company is destined for greatness as an independent entity. With no industry giant willing or able to buy Brocade, at least not for an amount to the liking of Klayko and the company’s board of directors, the storage-networking vendor’s chieftain must pretend that independence was the plan all along.

I have only read his words, not heard or seen him speak them, so I can’t say whether he’s a good actor. However, nearly everybody believes that Brocade was for sale, and that Klayko, realizing that his company was looking like a jilted bride at a marriage altar just off the Las Vegas Strip, had to project an alternate reality.

Said the Brocade CEO of the acquisition speculation, which was widely believed to have emanated from the company’s investment-banking agent, Qatalyst Group:

That’s just wrong. Why would we want to go ahead and do that when we have never been in a better position than we are today?”

Oh, I don’t know. Could it be because the company was afraid the consolidation wave would ebb and never come back ashore?

That issue aside, could Brocade have been for sale previously, but is no longer on the block? Not according to the company’s CEO:

“I never was actively shopping the company. When there’s misinformation we have to correct it. . . .”

“We’ve got a very bright future. We’ve spent the last five years planning and putting all the different pieces in place to execute on a very, very large infrastructure build out opportunity.”

Be that as it may, we could have a lot of fun parsing Klayko’s words. For example, perhaps he wasn’t “actively shopping the company,” but others, including Brocade’s investment banker, were doing the job for him.

Those finer distinctions probably don’t matter. Brocade might not be for sale, but it could still be bought. Similarly, the company still has OEM relationships with IBM and Dell, even if its relationship with Hewlett-Packard, which recently bought networking vendor 3Com, is suddenly fraught with uncertainty.

Broadpoint AmTech analyst Brian Marshall retains a sanguine view of Brocade, both as a takeover target and as an independent player.

“I think Oracle would be interested. Dell, Juniper, all those guys. So I definitely think it’s a strategic asset and people are probably kicking the tires there. At the end of the day, let’s look at it on a pure fundamental basis. This name’s cheap.”

For investors, it’s always wise to evaluate a publicly traded company primarily, if not exclusively, on the basis of its fundamentals. Everything else is a speculative sideshow.

What Intel Capital and Cisco Have in Common

What do Intel Capital and Cisco have in common?

Well, they probably have a few things in common, but something they definitely share is an interest in promoting and profiting from proliferation of the smart grid.

It’s an obvious connection.

Intel makes microprocessors, and it’s eager to get its chips into any IP-connected device that requires, or could benefit from, an electronic brain. Meanwhile, Cisco is the world’s leading purveyor of IP-based network infrastructure, including routers, switches, and wireless networks. Once all the embedded devices and end points on the smart grid have electronic brains, they’ll need to be networked to share and disseminate data.

Talking to Fortune’s Michael V. Copeland about Intel’s investments in companies that promote ubiquitous computing, Arvind Sodhani, Intel’s head venture capitalist, said the following:

“We benefit from growth in all those areas. Take clean tech and the electric grid. As the grid becomes more intelligent, more computing will go into things like household meters. We want to get our Atom processor into meters, and there are 120 million households in the United States alone.”

It makes sense. As conventional information technology (PCs, servers, enterprise networks, service-provider infrastructure, etc.) advances further into slow-growth maturity in the developed world, vendors such as Cisco and Intel will be seeking greener pastures in cleantech adjacencies.

Nokia Slashes Jobs Amid R&D Overhaul

On its own and as part of its joint venture with Siemens, Nokia is shedding staff in concerted efforts to reduce costs.

Last week, the world’s largest manufacturer of mobile phones cut 330 positions at research-and-development facilities in Denmark and Finland. Earlier this month, Nokia Siemens Networks (NSN), its telecommunications-equipment joint venture with Germany’s Siemens AG, announced that it would eliminate between 4,500 to 5,800 jobs by 2011.

Nokia today announced further headcount reductions, indicating that it would pare about 220 R&D jobs in Japan as part of an ongoing restructuring.

Said Nokia:

“As part of its global efforts to align its research and development (R&D) operations to be in line with its focused portfolio of future products, Nokia will be reducing its R&D activities in Japan.”

Before today’s move, Nokia had announced about 4,000 job reductions since January, including approximately 1,300 voluntary redundancy packages.

Nokia’s R&D group includes about 17,000 employees. Nokia, like many other information-technology concerns, is shifting some R&D jobs from relatively high-cost jurisdictions to lower-cost ones.

The company announced a third-quarter net loss of 559 million euros amid rising competition in the smartphone market. It also has suffered well-documented problems with its Nokia Siemens Networks joint venture.