DryShips (DRYS) is spiking up on news of the China stimulus package.

American Capital (ACAS) suspended its dividend sending its shares down sharply.

Foundry Networks (FDRY) is up on news of a revised buyout agreement from Brocade (BRCD).

Centennial Communications (CYCL) is staging a furious rally on a buyout by AT&T (T)

Douglas A. McIntyre

The two companies have agreed to amend their previous agreement. The new dealroughly values Foundry  at $2.6 billion, which is likely better than Foundrywould be seeing if the merger never came or if it was just a standaloneentity in this horrible market and economy.

The special meetings of shareholders have also been moved to November 7,rather than today so that the companies could finalize the documents.The merger is not a definitivepact.  An agreement in principle can still come apart from either side,and we all know what has happened to the cost of raising capital sincethe deal was announced in July.

In today’s climate this merger still makes sense.  Foundry has alwaysbeen one of the lower rungs on the totem pole.  But the mix of storageservices with Brocade and the routers and switches at Foundry will give more of a complete offering to buyers than if the companieswere standalone entities.  This also will allow the companies to bettercompete against the dominance of Cisco Systems (NASDAQ: CSCO) andagainst Juniper Networks (NASDAQ: JNPR) as well.  Whether or not theycan execute is something that the combined companies will have to prove.

This merger makes sense for shareholders, even at the lower terms fromwhat was agreed to in July.  Foundry shares are up over 18% at $15.43,while Brocade shares have slid from highs and are up about 4% at $3.70.

Sometimes less is actually quite a bit more.

Jon C. Ogg
October 30, 2008

• Cepheid (CPHD) Cut to Neutral at Piper Jaffray.
• Digital River (DRIV) Cut to Market Weight at Thomas Weisel.
• Foundry Networks (FDRY) Cut to Neutral at Baird.
• Manpower (MAN) Started as Sell at Deutsche Bank.
• Martin Marietta (MLM) Cut to Neutral at JPMorgan.
• Melco Crown (MPEL) Cut to Hold at Citigroup.
• MPS Group (MPS) Started as Sell at Deutsche Bank.
• Smart Modular (SMOD) Cut to Hold at Needham.
• Vulcan Materials (VMC) Cut to Underweight at JPMorgan.

Jon C. Ogg
September 10, 2008

• ArthroCare Corp. (NASDAQ: ARTC) Cut to Market Perform at William Blair.
• Assured Guaranty (NYSE: AGO) Cut to Neutral at JPMorgan.
• Foundry Networks (NASDAQ: FDRY) Cut to Neutral at Piper Jaffray.
• International Flavors & Fragrances (NYSE: IFF) Started as Underweight at Lehman.
• PetMed Express (NASDAQ: PETS) Raised to Neutral from Sell at Piper Jaffray.
• Precision Drilling (NYSE: PDS) Raised to Outperform at CIBC.
• salesforce.com (NYSE: CRM) Cut to Hold at Citigroup.
• SanDisk (NASDAQ: SNDK) Cut to Sell at Citigroup.
• Telefonica (NYSE: TEF) Cut to Neutral at JPMorgan.
• Texas Instruments (NYSE: TXN) Cut to Neutral at Merrill Lynch.

Jon C. Ogg
July 22, 2008

If you look at the two companies combined, it sure looks like thecompany is trying to either become a miniature Cisco Systems (NASDAQ:CSCO) or at least become a Juniper Networks (NASDAQ: JNPR). On acombined basis, this would be about half the size of Juniper only about5% of Cisco.  This looks like on the surface that it is going to marry the storage solutions withenterprise and service provider networking solutions and allow thecombined company to better address customer needs on a unified basistoward converged networks.

Brocade said it will finance the buyout via a combination of cash onhand at both companies and approximately $1.5 billion of committed debtfinancing from Bank of America and Morgan Stanley.

This deal has been approved by the boards of each company and issubject to approval by Foundry’s stockholders and regulatory approvaland certain other closing conditions.  The acquisition is expected toclose in the fourth quarter of calendar year 2008.

Based upon the reaction, you can see why so much of this deal was incash rather than in stock.  Brocade had a market cap of $3.09 Billionat the close, but shares are down 18% in after-hours trading at $6.81.Foundry shares are up over 32% in after-hours trading at $18.08.  Thisstill doesn’t get the company to its 52-week high of $21.86.

Jon C. Ogg
July 21, 2008

• eHealth (NASDAQ: EHTH) Raised to Perform from Underperform at Oppenheimer.
• F5 Networks (NASDAQ: FFIV) Started as Buy at Pacific Growth.
• Foundry Networks (NASDAQ: FDRY) Started as Buy at Pacific Growth.
• Lennar (NYSE: LEN) Raised to Neutral from Sell at UBS.
• OptionsXpress (NASDAQ: OXPS) Started as Market Outperform at JMP Securities.
• Schering-Plough (NYSE: SGP) Raised to Overweight from Equal-weight at Lehman Brothers.
• Third Wave (NASDAQ: TWTI) Cut to Hold from Buy at Deutsche Bank.

Jon C. Ogg
July 15, 2008

• Best Buy (NYSE: BBY) Cut to Hold from Buy at Deutsche Bank.
• Calamos Asset Management (NASDAQ: CLMS) Cut to Underperform at Credit Suisse.
• Foundry Networks (NASDAQ: FDRY) Cut to Neutral from Buy at Bank Of America.
• Greenhill (NYSE: GHL) Cut To Market Perform from Outperform at Wachovia.
• Hughes Communications (NASDAQ: HUGH) Started as Overweight at Lehman Brothers.
• Jefferies Group (NYSE: JEF) cut to Market Perform at KBW.
• Legg Mason (NYSE: LM) Raised to Neutral at Credit Suisse.
• McKesson (NYSE: MCK) started as Market Outperform at JMP Securities.
• MSCI Inc. (NYSE: MXB) started as Buy at UBS.
• Panera Bread (NASDAQ: PNRA) Raised to Buy from Neutral at Piper Jaffray.

Jon C. Ogg
June 6, 2008

Cisco Systems saw its share price encroach $30 in January 2004, that was its highest price since 2001 after the tech bubble burst and its stock fell from grace in the 2000 to 2002 meltdown period when shares went from over $60.00 to down under $10.00.  But now Cisco is back to where it was back in early 2004 before its stock sold off significantly again.  After the haircut seen over the last week, 24/7 Wall St. wonders if this stock should really be trading under $30.00 on recent concerns.  Here is what Cisco has now that it didn’t have when shares nearly hit $30 in early 2004…..

On the "2004 looking out ahead" scenario, or the negatives today:

• Cisco has a very weak auto, financial, housing and consumer business;
• and it even hinted at the enterprise customers being spotty in the U.S.;
• In 2004, Cisco was still mostly a routing, switching, and networking company that was putting together what looked like hodge-podge units;
• Smaller competitors like Juniper (JNPR) and even smaller Foundry (FDRY) were able to win more business away because of one-item pricing;
• it was buying back stock;
• as far as an outlook at the time (18 months looking forward), in fiscal July-2005 it generated $24.8 Billion in revenues.

But it has many more positives today, and this is only a portion:

• Estimates for fiscal July-2009 (20 months ahead) expected it to post over $46 Billion revenues;
• It now has this much more under its belt…Scientific Atlanta for cable set-tops, WebEx for its beloved telepresence, more data security, more WiMAX, more ‘future tech’ all leading into Web 2.0 massive expansions;
• It announced a $16 Billion China expansion plan;
• Cisco now dominates many customer orders as being able to be able to offer a one-stop shop from the cables and all the communications equipment literally all the way down the entire line from the port on the servers to the port on your PC;
• It has an India, China, Middle East, and Europe that is eating technology orders like the countries came out of the analog cycle just yesterday;
• Now everyone asks on Alcatel-Lucent (NYSE:ALU) and Nortel (NYSE:NT)… "Who are they?";
• and it is still acting like a stock buyback monster.

The truth is that we’ve left a lot out here to keep this simple, and we’ve probably omitted or just skipped other key pieces.  But 24/7 Wall St.’s $34 target set back in January for 2007 was hit right before earnings, and we even outlined ahead of this last earnings report why 24/7 wall St. felt that Cisco stock was going to either go over $35 or fall back to under $32 based on the earnings report.  Our $36 price target was hit on Microsoft (NASDAQ:MSFT) for 2007 and 24/7 Wall St. has not set a target for Cisco Systems (CSCO) and other key tech stocks into mid-2008 as of yet.  We’ll send those out in summary to our open email distribution list before we post these individually in detail on our open site.  The average target from Wall Street analysts is between $36.00 and $37.00.

• John Chambers Q&A;
• Earnings Conference Call data;
• Last earnings report.

Jon C. Ogg
November 13, 2007

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Jon C. Ogg
October 26, 2007