Brocade's new exec sees no pressing need for M&A

NEW YORK Mon May 3, 2010 9:41am EDT

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NEW YORK (Reuters) - Brocade Communications Systems Inc's (BRCD.O) new executive sees no pressing need for the network equipment maker to be acquired, despite the market's speculation it wanted to be bought.

John McHugh was hired in March as chief marketing officer in charge of global marketing and strategic alliances and analysts have cited his M&A experience as an asset for the company in a possible sale to a big technology vendor.

While announcing a new technology venture with EMC Corp (EMC.N) on Monday, McHugh shrugged off speculation he was brought in to help sell the company, which competes with industry leader Cisco Systems Inc (CSCO.O).

The company, which bought Foundry Networks in 2008, was already diversified enough to meet customers' needs, he said. The combined company sells fiber channel backbones switches and other network equipment that direct Internet traffic.

"It doesn't require at this point an acquisition in either direction. We really believe we have all the assets we need right now to be able to deliver industry leading solutions for customers," he told Reuters in an interview.

McHugh oversaw Nortel Networks' divestiture of the enterprise network solutions business. He also worked at Hewlett-Packard Co (HPQ.N) and experienced M&A deals at private equity firm Silver Lake Partners.

But deal making was not a priority at Brocade for now.

"We're pretty hunkered down here. We believe we have exactly the right portfolio to address what we think our customers need during this next five to 10 years," he said.

Sources told Reuters in October that Brocade had put itself on the block, although Chief Executive Michael Klayko denied this.

The company was widely seen as having missed out on a buyout opportunity when Hewlett-Packard chose to buy 3Com Corp, but rumors have persisted, with Dell Inc DELL.O and International Business Machines Corp (IBM.N) coming up as possible bidders.

Large technology companies are seeking to expand product portfolios and become "one stop shops" for customer technology needs. Smaller manufacturers are believed to be open to buyouts as a way of securing solid sales.

For now, the company has emphasized partnerships as a key growth strategy.

On Monday, Brocade said it would work with EMC to invest in new technologies to improve the efficiency of data centers. The aim is to ensure their mutual customers can run a wide range of software, including Microsoft Corp (MSFT.O) and Oracle Corp ORCL.O applications in a more "virtual" environment, meaning less hardware and lower operating costs.

(Reporting by Ritsuko Ando; editing by Andre Grenon, Bernard Orr)

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