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Jim (cont'd):  

I'm giving you a basket of five techs that no one really expects anything from... Remember, I gave you Tekelec (TKLC) last night...

Tonight... well let's just say, tonight, make mine...

Brocade Communications (BRCD)... That's right, Brocade...

This is a $5 and change tech... It's a tech has-been frankly... and I think it can turn into a tech comeback, and not just because of a rising tide of mutual fund dollars lifting all tech boats...

Brocade is actually doing better... It expanded its original equipment manufacturing agreement with IBM (IBM), a good client, to include switches and routers made by Foundry, which Brocade acquired... I wish they hadn't done it. I think the stock could have been higher... But I think the acquisition is now (priced) in the stock...

Brocade makes the equipment, and IBM slaps its label on the finished product and that increases Brocade's sales.

Brocade's just another fallen tech stock that is just selling at a fraction of where it once traded... as anyone who has read Confessions Of A Street Addict knows... from the back flap... "As Brocade continued to fall... It now plunged into the low $140s! I angrily yanked the phone..." $140s?... Now the stock's at $5. Boy, I've got to tell you something... this is historical...

Brocade has a bad balance sheet. I'm telling you everything. That's why it's speculative, okay?...

$1.2 billion in debt it racked up, paying for a string of acquisitions, including McData, back in January of 2007... but it's not the horror show that it's so often made out to be...

And Brocade really lucked out when it came to the timing of the recession, which pushed back the option of a networking technology where Cisco had the clear edge - a big competitor - for a couple of years... enough time for Brocade to make up the gap between it and chief competitor, Cisco. There's still a big gap, but Brocade's coming on. I do believe that.

Now, Brocade is about to step into the Blade Switch arena... Cisco (CSCO*) has 25% market share and it's not finished... It's great for a company to go up against a competitor everyone knows it can't beat... because Brocade doesn't need to win... it doesn't need to crush Cisco. It never can. It just needs to take a little share to make some money. And to mention Brocade and Cisco in the same breath is a little bit of a stretch. I own Cisco for my charitable trust...

The bottom line...

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The Bottom Line!:     When we speculate, we are not looking for perfection. A stock like Brocade Communications (BRCD) can go a long way on simply being better than expected... What a great setup, given all the money pouring into the sector... Oh, and let me give you the most important caveat (i.e., warning)... Cisco (CSCO*) reports tomorrow night... It has tended to talk its own business down of late, and it always makes the competition out to be losers. So your mission is to wait for Cisco's masochistic outlook, and then I think you should buy Brocade, after its competitor's self loathing and self bashing. If you buy it tomorrow morning, I think you're going to get hurt after the close.