IBM boosts Brocade ties amid Cisco rivalry: sources

NEW YORK Thu Apr 16, 2009 11:42am EDT

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NEW YORK (Reuters) - IBM (IBM.N) will begin selling ethernet switching and routing products from Brocade Communications Systems Inc (BRCD.O), seeking to diversify partnerships amid increasing rivalry with Cisco Systems Inc (CSCO.O), sources with knowledge of the matter said.

The move, due to be announced later this month, comes after Cisco said it would start selling computer servers to data center customers, moving into direct competition with International Business Machines Corp and Hewlett-Packard Co(HPQ.N), which both help sell Cisco's network equipment through partnerships.

Analysts have said Cisco's move could prompt IBM and HP to reevaluate sales partnerships in favor of other equipment makers like Brocade, as well as Juniper Networks Inc JNPR.O.

IBM already sells some Brocade equipment, such as storage-related devices, but will bolster the relationship by selling switches and routers made by Foundry Networks, which Brocade acquired late last year.

The expanded partnership will help IBM offer its customers greater choice and an alternative to its current vendor partnership with Cisco, said one source who spoke on condition of anonymity because the announcement has not been made.

Officials at Brocade and IBM declined to comment, but Brocade Chief Executive Michael Klayko had told Reuters in an interview earlier this week that the company expects to benefit from Cisco's growing competition with its partners.

Brocade shares rose 17 cents, or 4.06 percent, to $4.36. IBM shares rose 72 cents, or 0.73 percent to $99.57.

(Reporting by Ritsuko Ando; Editing by Lisa Von Ahn and Gerald E. McCormick)

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