Brocade Communications Systems Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of network equipment supplier Brocade Communications Systems (Nasdaq: BRCD  ) fell as much as 10% in trading today.

So what: Bloomberg wrote an article concluding that after Dell's (Nasdaq: DELL  ) recent purchase of Force10 Networks, it had lost interest in acquiring Brocade. An RBC Capital analyst recently came to the same conclusion, asserting that the purchase will also hurt Brocade's business.

Now what: Now, the biggest concern for investors going forward involves the fate of Brocade's business. Dell resold some of Brocade's products, and analysts are concerned that the company's competing in an increasingly commoditized sector. Shares only trade at 11 times forward earnings estimates, so there might be some value here. For now, I will stay away from shares because of Brocade's uncertain future.

Interested in more info on Brocade Communications Systems? Add it to your watchlist.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1522013, ~/Articles/ArticleHandler.aspx, 9/17/2014 5:44:11 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement