Report: Brocade's On The Block, Broadcom Might Be The Buyer

Networking vendor Brocade Communications is said to be in closing in on a deal to sell itself, according to a Bloomberg report citing people familiar with the matter.

According to the report, semiconductor vendor Broadcom Corp. is said to be one of the interested parties.

But the report also said no deal has been reached and may fall apart, although a potential deal could be announced as soon as this week.

[RELATED: Partners: Brocade's Acquisition Of Ruckus Wireless Creates More Formidable Foe To Cisco]

Laurie Falconer, a spokeswoman for Brocade, said in an email reply to CRN that the company's policy is to not comment on market rumors or speculation.

Earlier this year, Brocade, based in San Jose, Calif., beefed up its networking portfolio with a $1.2 billion purchase of wireless vendor Ruckus Wireless, enhancing Brocade's position with technology spanning from the heart of the data center to the wireless network edge. Its channel partners told CRN that the deal created a much more formidable foe against networking leader Cisco Systems.

Andrew Fisher, CEO, of Brocade partner Myriad Supply, of New York, said he hopes that any acquisition wouldn't change the partner engagement model. "We’ve been extremely happy with our relationship with Brocade, and have already had some great combined Brocade-Ruckus wins now that Ruckus is part of the Brocade family," Fisher said in an email response to an inquiry from CRN.

In its most recent fiscal quarter, which ended July 30, Brocade reported a 7 percent year-over-year increase in top-line revenue, from $523 million to $591 million. But its non-GAAP gross margin contracted slightly, from 68.6 percent to 66.5 percent. The company said IP networking product revenue rose 36 percent year-over-year to $209 million, with about one-third of that coming from the Ruckus acquisition.

Revenue from Brocade's storage attached networking (SAN) products fell 9 percent, primarily the result of lower Fibre Channel director sales, which Brocade said plunged 23 percent.

For its 2015 fiscal year, which ended a year ago today, Brocade posted $2.3 billion in net revenues, a gain of 2.2 percent over fiscal 2014. But net income grew a more robust 38 percent, to more than $340 million.

Investors responded favorably Monday to the news as Brocade stock finished up nearly 22 percent, closing the day's session at $10.60 a share.