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Winners & Losers

NOON -- It will take months for the dust to clear from the Brocade/McData merger that exploded this morning. (See Brocade Bags McData For $713M.) In the meantime, the deal will claim its share of winners and losers. Is it too soon to say who's who? Maybe, but that won't stop us. Here is a tentative list:


  • Mike Klayko. This former McData employee owned 1 percent of Brocade's common stock as of April 2006. Yu...Meeee!!
  • McData shareholders. They'll own 30 percent of Brocade when the deal is done. 'Nuf said.
  • Credit Suisse Securities LLC (USA). According to SEC filings, Credit Suisse is the only entity entitled to a "finders' fee" in this deal. Apparently, McData sought their services in finding a suitable partner in June 2004. No word on how much they'll get.


  • Greg Reyes. Talk about being in the wrong place at the wrong time. Not only does this guy no longer own stock in Brocade, but he'll likely need most of his sizeable exit purse for his legal warchest. Still, Reyes's interest in the San Jose Sharks LP partnership may keep him in a bit of Brocade money. According to SEC filings, Brocade "receives marketing and advertising services and use of certain facilities owned by the limited partnership."
  • John Kelley. Well, sort of a loser, anyway. While he owns 3.36 percent of McData's Class B common stock, he's already been relegated to the role of temporary "advisor," and he isn't even being considered for the surviving board.
  • Brocade's HR department. We debated whether these folks belonged under this category. Wouldn't you feel like a winner if flowers and baked goods started appearing on your desk out of nowhere, or all those lunch offers? Still, Brocade's HR will oversee the bloodletting, trying to assimilate (or not) 1,400 employees into Brocade's workforce of 1,160. The redundance abundance is easy to foresee.

There are still lots of possible winners and losers. The jury will be out for awhile on Cisco, for instance, and McData's OEMs and customers. Interesting times, and lots more to come.

Mary Jander, Site Editor, Byte and Switch

  • Brocade Communications Systems Inc. (Nasdaq: BRCD)
  • Cisco Systems Inc. (Nasdaq: CSCO)
  • McData Corp.