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No. of Recommendations: 12

I, along with many others, enjoyed your post on Brocade. Thanks for taking the time to run the criteria on the company. I would add that two significant value chain announcements were made this week. The first being the Cisco/Brocade announcement of FC over IP. The second was the Brocade/Emulex announcement to extend their partnership and to advance connectivity and end to end interoperability for SANs. As we read the excellent post about 'architecture' and how companies position themselves, Brocade is a real time classic case study for gorilla gamers to be following.

That being said, I certainly don't need to tout the company any more than I have in the past. <ggg> It has become one of the more significant holdings over the past year while a few others have been rebalanced (not by any micromanagement of my doing, but simply by the market deciding to place different values on some of my stocks). However, those are just short term swings and nothing of importance is taken from it by this investor as time will always 'rebalance' things for us. Regardless, Brocade shows up this week in my pie chart as one of my major investments along with another younger company that has been doing quite well.

I responded to xerohype's excellent post on comparing Rule Breaker investing strategies to Gorilla Game investing strategies last week. I feel I need to respond to your post as well to mention a couple of things. Each strategy is designed to identify certain types of investments and have a set of criteria which are applied to uncover and monitor investments within that strategy. Rule Maker criteria has been developed by Tom Gardner and his staff to be applied to large-cap companies (not technology specific) that have at least $1 Billion in annual revenues ($250 Million per quarter).

That being said, it is important to monitor the advance of companies like Brocade, Broadcom and Siebel (to use three examples) as they grow from their emerging positions of tweeners to possible Rule Makers. The Rule Maker criteria fits well with the gorilla game because one of the elements is dominant, monopoly type status in their respective areas. Brocade has around $155 Million in revenue for the previous 4 quarters. I am not arguing about the growth and positive signs I see for this company. I'm very 'gung ho' on the investment, but simply want to point out the 'danger' of applying or melding criteria to make investment decisions. I would argue that one should at least understand that based on Rule Maker criteria, until a company reaches $250 Million in quarterly revenue or $1 Billion in annual revenue, that it may or may not be the most effictive application of criteria designed for something else.

That being said, it is not a given at this point in terms of gorilla gaming, that any game is 'over' and decided. It takes time. As revenues ramp up and competing technologies are developed and surface over the next few years the game will unfold to the point where Rule Maker criteria will, in my opinion, make more impact on guiding investment decisions using that criteria. Until then, I continue to believe that gorilla gaming criteria would best be used in terms of Brocade at this point.

Some comments from Douglas Nordgren:

"Brocade's FSPF algorithm (Fabric Shortest Path First) was ratified for presentation to the ANSI/T11 for adoption as the fabric inter-switch standard. Brocade remains confident that the committee will ratify it as such soon. In fact, CSCO is counting on it, and has given it a push with their technology agreement with BRCD........As James Richardson of Cisco ruefully admitted, you never know how standards will work out."

Likewise, investors interested in Brocade, SANs and fiber channel switches should follow companies like Gadzoox, Vixel and Ancor to get the full scope of the game going on and the 'holy wars' of fiber channel. I do think that the time will come for application of Rule Maker criteria, but would simply raise the point of understanding what the criteria was designed to do and where it is best applied. This is not designed to take away anything from John's post. Simply trying to focus on keeping gorilla gaming, rule breaking and rule making strategies from getting melded into something they were not designed to do.

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