For investors looking for rare bargains in the current market, Brocade Communications could be the just right stock. The stock has been beaten down amid multiple downgrades and tepid guidance. Historically, tumultuous times offer some of the best opportunities to buy stocks.Brocade suffered from a combination of execution and sales-model issues, as well as weakness in federal-government business over the past several months that has hampered its progress in the Ethernet market. However, it now appears that the company has started to reorganize its sales force to focus on direct customers and the product channel.It has successfully integrated Foundry Networks, which it acquired last year. It has also expanded partnerships with large technology vendors such as IBM and Dell Inc to expand its customer base. Large companies like Cisco and IBM have already reported increasing business in their recent quarters and smaller players like Brocade too are expected to follow. Moreover, rebound in technology spending too is expected to help the company to get back on track. With about 75% share, the company is a leader in storage networking switch. Brocade may very well get back to beating and raising expectations. Any better execution for Brocade in upcoming quarters will likely be met with significant price appreciation.
Brocade is also seen as a potential takeover target after reports surface late last year that it was shopping itself to potential buyers. Oracle Corp., Dell Inc., IBM and Juniper Networks Inc. are often mooted as possible suitors for the company. Many industry experts are of the opinion that the parts of Brocade may be worth more than the total sum of the company.
