Minyanville Professor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
The Brocade Communications (NASDAQ: BRCD) deal is interesting for a couple reasons. First of all -- hey it's a deal. So yes, deals can still get done, even in this market.
Second, and more importantly, BRCD is paying $3 billion or almost exactly three times the cash and investments on Foundry Networks' (NASDAQ: FDRY) books. So in essence, 1/3 of the deal price is being funded by the liquidity of Foundry Networks balance sheet. Looking at the technology landscape, there are a whole bunch of companies that look like FDRY from a balance sheet perspective.
Also, this deal highlights the fact that even in a market full of angst, companies do look forward to see what business trends they want to exploit. My take is BRCD is seeing it wants a bigger part of the bandwidth pie going forward and the two companies may have complementary technology to help extend their current reach.
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