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Cisco Moves In on Gadzoox: Page 2 of 4

Clearly, Volpi wants tried and tested technology. Gadzoox has that. However, its market share numbers aren't stellar. IDC pitches the company at number four in the FC SAN market behind Brocade Communications Systems Inc. (Nasdaq: BRCD), McData Corp. (Nasdaq: MCDT),
and QLogic Corp. (Nasdaq: QLGC).

Further, Gadzoox's financials over the last couple of quarters have not been anything to write home about, and it expects revenues to remain flat for the next two. On March 31, Gadzoox reported a fourth-quarter 2001 net loss of $40.3 million on revenues of $6.4 million, compared with a net loss of $10.3 million on revenues of $47.9 million for the same period a year ago.

In other words, if Cisco does buy Gadzoox, it won't be in the hopes of reaping big revenues from the deal in the immediate future.

So why would Cisco be interested? For Gadzoox's technology, probably.

Gadzoox's newly released Slingshot 4218 is a 2-Gbit/s Fibre Channel switch, available ahead of Brocade's 2-gig product, which is slated to ship year end. Another possible strength of the switch is that it can also be connected to gigabit Ethernet networks -- meaning it could plug straight into Cisco's Catalyst LAN switches to connect storage devices over wide-area networks.