November 24, 2009 / 1:33 PM / 10 years ago

UPDATE 2-Brocade denies it looked for a buyer

* Brocade says seeking growth through partnerships

* Partnerships with IBM, Dell on track

* Shares fall 5.4 pct despite strong results (Adds comments, background on industry M&A, share move)

By Ritsuko Ando

NEW YORK, Nov 24 (Reuters) - Brocade Communications Systems Inc’s BRCD.O top executive denied the network equipment maker had looked for a buyer and said the company was seeking to grow through partnerships.

People familiar with the matter had told Reuters in October that Brocade, which sells network gear and software that help companies manage data networks, had put itself on the block and that HP was a possible buyer.

“That is just false,” Chief Executive Michael Klayko said during a conference call with analysts on Tuesday.

The company was widely seen as having missed out on a buyout opportunity when Hewlett-Packard Co (HPQ.N) said it would buy 3Com Corp COMS.O rather than Brocade.

Shares of Brocade fell 5.4 percent on Tuesday despite stronger-than-expected results announced the previous day. [ID:nN23258074]

The stock is down about 15 percent since HP announced its plan to buy 3Com.

The HP-3Com deal followed a string of acquisitions in the technology industry, including Dell Inc’s DELL.O purchase of Perot Systems Corp, Xerox Corp’s (XRX.N) pending acquisition of Affiliated Computer Services Inc ACS.N and Oracle Corp’s ORCL.O plan to buy Sun Microsystems JAVA.O.

Large technology firms are seeking to expand their product portfolio and become “one stop shops” for their customers’ technology needs. Smaller manufacturers are believed to be open to buyouts as a way of securing a solid sales channel.

Brocade, however, said it was seeking to grow through partnerships, and said its sales agreements with Dell and IBM were on track to bring in more revenue in 2010.

“We’re comfortable with the progress, specifically with IBM and Dell,” said Ian Whiting, Brocade’s senior vice president of worldwide sales.

Brocade shares were down 5.4 percent, or 42 cents, at $7.38 in early Nasdaq trading. They had risen slightly after-hours on Monday following the company’s earnings announcement. (Reporting by Ritsuko Ando, editing by Gerald E. McCormick and Derek Caney)

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