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No. of Recommendations: 14
I'm very surprised that no one has carried out a Rule
Maker analysis on this excellent company. Yes,
TMFFuz's Foolish RM analysis on BRCD was very well
done, but it still is beneficial to see the numbers
and see where BRCD stands in RuleMaker territory. You
may be surprised at the results that you see.......

The Motley Fool's Rule Maker Ranker
Version 3 -- Updated June 2000

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(Please read all three of these competitor comments.)
Financial AnalysiCompany Being Evaluated Competitor #1 Competitor #2 Competitor #3

Brocade (BRCD) VIXL ANCR ZOOX
Current Period Year-ago PeriodYear-over-Year Current Period Current Period Current Period
Jun-00 Jun-99 Growth Jun-00 Jun-00 Jun-00
Income Statement
Sales 92,138 20,051 359.5% 7,781 8,498 9,002
Cost of Goods S 38,159 9,921 284.6% 5,284 4,593 5,223
Net Income 20,077 1,611 1146.2% (5,138) (2,347) (14,182)
Shares Outstand 122,212 110,028 11.1%

Balance Sheet
Cash & Equivale 196,156 76,336 157.0% 52,369 80,941 60,154
Current Assets 253,955 91,856 176.5% 62,659 89,029 86,482
Short-term Debt 0 0 No Debt 3,064 23 1,415
Current Liabili 62,691 20,698 202.9% 14,893 7,683 17,194
Long-term Debt 0 121 -100.0% 2,468 0 1,008

Cash Flow Statement
Operating Cash 36,796 5,616 555.2%
Capital Expendi 8,139 1,855 338.8%
1 1 1
Margins & Ratios . . . Competitors' Average
Gross Margins 58.6% 50.5% 8.1 32.1% 46.0% 42.0% 40.0%
Net Margins 21.8% 8.0% 13.8 -66.0% -27.6% -157.5% -41.9%
Cash-to-Debt No Debt! 630.88Eliminated Debt! 9.47 3511.84 24.83 12.12
Net Cash 196156.0 76215.0 157.4% 46837.0 80918.0 57731.0 61828.7
Fool Flow Ratio 0.92 0.75 23.0% 0.87 1.06 1.67 1.20
Cash King Margi 31.1% 18.8% 12.3 0.0%


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Ranking Rule Makers

1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 1 Sales Growth 3
Openness 1 Gross Margins 3
Optimism 1 Net Margins 3
Legitimacy 1 Shares Outstandin 0
Inevitability 0 Cash-to-Debt 3
Solitariness 1 Fool Flow Ratio 0
Humor 1 Expansion Potenti 3
Subtotal 6 Subtotal 15

2) Financial Loca Points (0-2) 4) Monopoly Statu Points (0-4)
Mass Market Habit 1 Gross Margins 4
Gross Margins 1 Net Margins 4
Net Margins 2 Net Cash 2
Cash-to-Debt 2 Fool Flow Ratio 2
Fool Flow Ratio 2 Convenience 4
Your Interest 2 Subtotal 16
Subtotal 10
5) Your Enjoymen 1

Total Score 48 Second Tier

SURPRISE ! BRCD is NOT a Tier I Rule Maker. Why?
Because it fails the test of the Flowie (the Flowie
really is a tough test to pass, especially when
comparing with competitors). Flowie has been creeping
up, year over year. It's still under the 1.25
criteria, but this is definitely one area to
scrutinize BRCD in the coming quarters.
BRCD also loses points because its shares outstanding
have increased beyond the allowable criteria for
RuleMakers. However, for a company that is growing
that fast, so much, the shares outstanding growth is
not very harmful at all.

If anything, giving shares outstanding growth as much
weight as the Flowie is questionable. Why does share
dilution, something that doesn't give us insight into
the health of the business, be given equal footing
with the Flowie, which gives us direct insight into
the health of the business??? Actually, out of all of
the Financial direction criteria, I find shares
outstanding to be the least useful because it doesn't
give me any insight into how well the business is
being run. At least with margins, I can tell how the
company is managing its products, and expenses.


Anyways, back to BRCD....
1) BRCD's competitors really tell the story here.
There revenue numbers and net income numbers are like
trying to compare a dilapidated house to the world
trade centre!

2) ZOOX had to restate their earnings when they
discovered that the SEC won't allow them to use the
pooling of interest method to account for their
acquisition of SmartSAN systems. Just goes to show
why it's good to stick with the established leader
instead of hoping for growth potential from the
smaller player.

3) ANCR is being acquired by QLGC. But I don't think
this has any impact on BRCD's stellar performance.

4) I did not include the cash king margins for BRCD's
competitors because it was inconsequential to the RM
scoring. Besides, with the competition in -ve net
income territory, I don't think their CKNM will look
very pretty.


Thx.
Cheers,
Albert
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