BRCD - Brocade Communications - $5.81

Company Description:

Brocade Communications Systems, Inc. (Brocade) is a supplier of data center networking solutions that help enterprises connect and manage their information. The Company offers a line of data center networking hardware, software products and services.

Why We Like It:
Brocade had a serious haircut last week with a drop from $7 to $5.25 on an earnings warning. Earnings on Monday beat estimates but revenue missed expectations. Brocade's earnings increased +27% and revenue +25%.

Brocade said they were forecasting earnings of 54-58 cents for the full year and analysts were expecting 60 cents. The lowered outlook came from a longer than expected recovery cycle and delays in government contracts. Brocade is constantly rumored to be a takeover target and IBM is one of their main partners. If IBM had any aspirations this would be the time to strike with Brocade at 10-month lows.

Brocade bought Foundry networks for $3 billion and that division is now 18% of Brocade's sales, up from 12% in the prior year. As one analyst put it, "Brocade is not broken."

Target = $7.00

Annotated chart:

Entry on  March 01 at $xx.xx 
Change since picked:     + 0.00   			
Earnings Date          02/22/10 
Average Daily Volume: 42 Million  
Listed on  February 28, 2009