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McData Snaps up SANavigator

Trumps Brocade by snapping up multilingual management startup. Parliamo storagio?

McData Corp. (Nasdaq: MCDT) stole a march on archrival Brocade Communications Systems Inc. (Nasdaq: BRCD) Wednesday, announcing its intention to acquire SANavigator Inc. for $29.75 million in cash. SANavigators software will give McData the ability to manage other vendors' switches besides its own, something Brocade still can’t do, analysts say. (see McData Buys SANavigator).

Following the customary closing conditions, McData expects to take a one-time charge of between $2.5 million and $3 million in September 2001 for costs associated with the purchase. The company says the deal will dilute its earnings by $0.02 a share in the fourth quarter of 2001 and $0.05 to $0.06 a share in full year 2002. It does not expect to show revenue from the acquisition until the first quarter of 2003.

SANavigator was one of the last subsidiaries of Western Digital Corp., which is restructuring to focus solely on its hard disk drive business. Western Digital recently announced $5.5 million in external funding to support this move, as well as the sale of its Connex subsidiary to Quantum Corp. (NYSE: DSS) (see Quantum Buys NAS Startup).

For McData’s part, it hopes to increase its share of the storage management software market, a sector estimated to reach $13.4 billion by 2004, of which the storage network management piece could exceed $1 billion, according to Gartner/Dataquest

.

By integrating SANavigator into its EOS (enterprise operating system) management software and EFCM (enterprise fabric connectivity manager) software products, McData claims it will have the edge over its competition for managing multivendor networks.

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