Continuing its buying spree, Brocade Communications Systems Inc. acquired IP acceleration chip provider Silverback Systems Inc. Monday for an undisclosed cash sum. News of the deal bumped up Brocade's shares 41 cents, or 4.9%, to close at $8.77 on the Nasdaq.
Silverback had raised $51 million in funding since it was founded in 2000 with Network Appliance Inc. NetApp) jumping in on the company's last round of investment in April 2006. Silverback had OEM deals with Qsan Technology Inc., Vitesse Semiconductor Corp. and Montilio Inc., and some not publicly announced, according to Brocade officials. The other partners would be "in line with companies we deal with more often," said Madhu Matta, director of Brocade's switch and embedded technologies business, keeping a tight lip on any names.
Brocade said it was not prepared to reveal product plans for the Silverback technology until mid-2007. For now, the deal is a "technology and people-based acquisition," Matta said. Silverback has 38 employees, most of them engineers, headquartered in Campbell, Calif.
With the increasing adoption of IP storage and 10 Gigabit Ethernet (GigE) networks just around the corner, analysts expect Brocade to drive hard into the IP networking market. "They are gearing up for the 10 Gig world and clearly looking at staying on the performance curve for IP SAN and NAS file serving," said Brad O'Neill, analyst with the Taneja Group. "With 10 Gig, there's clearly a need for network acceleration."
The Silverback deal marks the third acquisition for Brocade in the past 10 months. In March of 2006, Brocade acquired NuView Inc., a maker of file management software, headquartered in Houston. This was followed in August with the announcement to acquire McData Corp., for $713 million.
According to O'Neill, Brocade envisions itself as becoming a stateless end-to-end data and storage networking company, regardless of the protocol involved. "But, since no data networking company currently exists that even looks like that, it's not clear what category they fall into anymore," he said. All will be revealed mid-year, Brocade officials claim.