![brocade communications brocade communications](https://c1.neweggimages.com/ProductImage/A389_1_20160507882504283.jpg)
Any takeover offer would be a real bonus for investors and because the CEO Lloyd Carney sold the last two companies he led, a deal for Brocade Communications might be more likely than many investors realize. However, the long-term future looks bright and the uptrend could continue for this stock since the valuation is still below the market average. Another risk is that the stock has had a nice run and that is why I would wait to buy on a short-term pullback. The potential downside risks for this stock seem limited at this time, however, investors should consider that many rivals are much larger and have more financial resources for research and development budgets. That puts the price to earnings ratio at just around 12 times earnings, which is a relative bargain when compared to the average of 16 times earnings for the S&P 500 Index (NYSEARCA: SPY). The stock also looks cheap based on earnings estimates of about 83 cents per share for 2014 and 87 cents per share for 2015. This financial strength reduces potential downside risks for investors and it makes the company more attractive as a potential takeover target. In spite of the strong stock performance, the shares and the company are still offering value to investors and potential suitors.īrocade Communications has a strong balance sheet with around $1 billion in cash and about $599 million in debt. For the past several months, this stock has been worth buying on every pullback and that trend could be poised to continue. It has a market capitalization of about $4.4 billion, which makes it an "affordable" target for many major tech companies.Īs the chart above shows, Brocade Communications' shares have been in a solid uptrend.
![brocade communications brocade communications](https://img0.etsystatic.com/000/0/5438032/il_570xN.317830496.jpg)
![brocade communications brocade communications](https://images.successstory.com/img_company/bracade_1454913147.jpg)
This sector has a number of much larger companies, and that is one reason why Brocade Communications (by acquisition) could be an attractive way to enter this space or increase market share in this industry. Let's take a closer look at Brocade Communications below:īrocade Communications is a manufacturer of data storage and networking equipment. Another recent article details why Ernst & Young believes 2014 could be a "blockbuster" for mergers and acquisitions in the tech sector. This company recently made a list of 44 top takeover targets, which was published by Morgan Stanley (NYSE: MS). In my continued research, I have found some other potential tech takeover targets, which include Brocade Communications Systems (NASDAQ: BRCD). To read more about Jive Software, see this article.
Brocade communications software#
I find a deal extremely likely for Jive Software because it has (recently) hired an investment banking firm to represent it in a potential deal and also because the CEO Tony Zingale previously sold two other tech companies to Hewlett Packard (NYSE: HPQ) and Nortel Networks. One of the most likely takeover targets I found was Jive Software (NASDAQ: JIVE), which trades for just about $8 per share. I have been focused on researching tech companies that appear poised for a buyout. Facebook recently announced a deal to buy Oculus Rift for about $2 billion as well as WhatsApp for around $19 billion. Companies like Facebook (NASDAQ: FB) are able to use stock as currency and also have considerable amounts of cash available to make deals happen. With the tech sector seeing above average growth, it seems that this is one of the best areas to invest in for takeover deals. With interest rates remaining at very favorable levels, and many corporations sitting on many millions and in some cases billions of dollars in cash, the environment for takeovers remains ideal.