Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

The Storage Shakeout Is Tossing Brocade Around Too

Brocade's (NASDAQ:BRCD) strong recovery rally ended on April Fool's Day, in large part due to growing pessimism about enterprise storage demand and the resulting demand for Brocade's fibre channel storage area network (or SAN) switches. Add to that some ongoing pessimism regarding the company's ability to compete in IP networking and whether there's much incremental leverage to squeeze from the business and Brocade is back to a "show me" story.

I continue to believe that Brocade shares are undervalued, but the market is notoriously unkind to low-growth free cash flow rich tech stories and the storage market is going to need a few more quarters to sort itself out. At a minimum, I think that means that...

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