Menu
Brocade to buy McData

Brocade to buy McData

Storage switch vendor Brocade Communications Systems has announced that it is buying McData in an all-stock transaction valued at US$713 million.

Brocade CEO Michael Klayko says the combined companies will be able to develop the "next-generation datacentre", offering a unified platform with interoperability in the near-term and convergence in the long-term that will protect existing user investment. The converged platform will come out in the next technology cycle, which will be slightly more than a year away, says Tom Buiocchi, Brocade's vice president of marketing.

Details on what the buyout will mean to product lines are few, but Klayko says that Brocade believes McData could lose as much as 30% of its annual revenue and still earn a profit through up to US$100 million in savings in the first year after the merger.

Klayko says there will be layoffs as a result of the merger, but won’t specify how many. McData CEO John Kelley is listed as a post-merger "advisor" in the press release about the transaction. The remainder of Brocade's executive management team will continue to serve in their roles, the release states. Brocade will retain its name and corporate headquarters in San Jose and McData will become a wholly owned subsidiary of Brocade.

The acquisition is expected to be completed in McData's first fiscal 2007 quarter, after shareholder and regulatory approval.

Both companies have been operating under somewhat of a cloud; former Brocade CEO Gregory Reyes is in the midst of a criminal hearing arising from investigations into alleged stock-option manipulations while McData has been losing market share, says Mark Kelleher, an analyst with the stock research firm Canaccord Adams, who was not upbeat about the acquisition.

"There is a complete overlap in products and customers," Adams says. "It looks like you've got one company doing very well, one company that's stumbling, and if you'd waited a couple of quarters you might have had that market share anyway."

McData had said in mid-July that in 30 days it would be announcing a product strategy that makes it easier for organisations to centralise remote storage needs and perform tasks such as backup and electronic discovery.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Events

Why experience is the new battleground for partners

Join us for an exclusive webinar, in association with Hewlett Packard Enterprise and Technology Services Industry Association (TSIA) and learn about the latest industry insights and how technology services continue to evolve to deliver differentiated value, and how partners can be successful in 2021 and beyond.

Featured

Slideshows

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

Hundreds of leaders from the New Zealand IT industry gathered at the Hilton in Auckland on 17 November to celebrate the finest female talent in the Kiwi channel and recognise the winners of the Reseller News Women in ICT Awards (WIICTA) 2020.

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards
Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

The leading female front runners of the New Zealand ICT industry joined together for the annual Reseller News Women in ICT Awards event at the Hilton in Auckland, during which hundreds of guests celebrated 13 outstanding individuals who won awards, chosen from more than 50 finalists representing over 30 organisations.

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards
Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

More than 500 channel leaders gathered in Auckland on 21 October at the ​Reseller News Innovation Awards ​2020 to celebrate the achievements of the New Zealand technology industry's top partners, start-ups, vendors, distributors and individuals.

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners
Show Comments