Extreme Networks has completed its takeover of Brocade’s networking business which it claims will take it over the $1 billion revenue threshold.
For those who came in late, the acquisition was first announced in March, came after Broadcom acquired Brocade but wanted to off-load its networking business. Extreme Networks meanwhile wrote a cheque for Zebra’s LAN business and Avaya’s networking bits.
Extreme Networks CEO Ed Meyercord said: “This is an exciting day for Extreme as we have now significantly strengthened our position in the expanding high-end datacentre market with the industry leading solution for enterprise customers. Through a series of synergistic acquisitions, Extreme is now a top player in the enterprise networking industry and expects to generate over $1bn in annual revenues.”
He added that the announcement was not only a significant milestone for our growth strategy, but it also allows Extreme to assist more customers around the globe with end-to-end software-driven solutions to drive their digital transformation initiatives.
Extreme Networks’ share price has risen over 130 percent since the start of the year, giving it a market cap of $1.3 billion.
Chipmaker Broadcom is writing a $5.9 billion cheque for networking systems supplier Brocade.
Broadcom said that it will be an all-cash transaction for a total of $5.5 billion, plus $400 million of net debt. Brocade’s board of directors has approved the deal and Broadcom expects to complete the acquisition in the second half of its fiscal 2017.
Broadcom said it would retain Brocade’s fibre channel SAN switching business and divest Brocade’s IP networking business – including the recently acquired Ruckus Wireless.
Hock Tan, president and CEO of Broadcom said the deal enhances Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers.
“With deep expertise in mission-critical storage networking, Brocade increases our ability to address the evolving needs of our OEM customers. In addition, we are confident that we will find a great home for Brocade’s valuable IP networking business that will best position that business for its next phase of growth.”
Broadcom said the deal does not depend on Brocade’s off-loading its IP networking business.
Lloyd Carney, Chief Executive Officer of Brocade, in a statement that the transaction represents significant value for our shareholders and creates new opportunities for our customers and partners.
“Our FC SAN solutions will help Broadcom create one of the industry’s broadest portfolios for enterprise storage. We will work with Broadcom as it seeks to find a buyer for our IP networking business, which includes a full portfolio of open, hardware and software-based solutions spanning the core of the data center to the network edge.”
Brocade, just completed its $1.2 billion acquisition of wireless vendor Ruckus Wireless in May. Brocade reported $2.26 billion in revenue in fiscal 2015. It just closed its fiscal 2016 on Monday and has not yet reported results for its fourth quarter and full fiscal 2016.
Broadcom said Brocade’s fibre channel SAN business would contribute approximately $900 million of pro forma non-GAAP EBITDA earnings in its fiscal 2018.
A report by Markets and Markets estimated that by 2019 the datacentre automation market will be worth $7.53 billion.
The report said that demand for fast data access and storage continues to rise and that’s creating more and more datacentres. Datacentre automation is sometimes known as Software Defined Data Centres (SDDCs). Automation helps management deal with scalability, flexibility, manageability and reduced costs.
The market research company said it segments the datacentre automation market by hardware such as network automation, server automation and storage automation. It also values the secor by service including consulting services, installation and support.
The demand for data is forcing businesses to either build new datacentres or upgrade existing sites.
And the cost of datacentre infrastructure continues to increase at the same time as IT budgets continues to decrease.
Majr vendors in the industry include HP, Oracle, Dell, Brocade, Cisco, IBM, CA and BMC Software.
A survey commissioned by Brocade has surveyed 350 global resellers and systems integrators and concludes that datacentre availability is the primary concern of customers.
The survey, carried out with the aid of Avnet, TD Azlan, TechData, Arrow ES, edsLAN, the Immix Group, Mindware and Westcon showed that 60 percent of end users see fabrics as the future of networks. But their unwillingness to invest in datacentre networks is a big hurdle for enterprises.
A third of the channel players surveyed said their customers only invested in networks to support a specific new application or service. Over one in 10 said they only invested when the network was already failing.
The survey identified five drivers of network investment: virtualisation, faster access to data and applications, greater bandwidth, supporting increasing data volumes and the need to support mobility.
Sixty percent of the channel players think fabric networks will be deployed in datacentres by 2020.
However, a third admitted knowing little about SDN, while 62 percent think budget constraints have a significant impact on companies investing in technology. And 63 percent consider vendor financing as “vital” or “more important”.