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            B R E A K F A S T   W I T H   T H E   F O O L
                    Thursday, November 30, 2000

benjamin.rogers@enron.com
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"No man is great by imitation." -- Samuel Johnson


BROCADE COMMUNICATIONS FACES A TOUGH MARKET
The company's solid earnings report yesterday may not be
rewarded by increasingly skittish investors.

By Chris Rugaber

Storage network infrastructure company Brocade Communications
(Nasdaq: BRCD) reported a fourfold increase in revenues after
yesterday's market close, and beat analysts' earnings estimates,
but the company's shares declined in after-hours trading anyway.

Sales for the company's fiscal fourth quarter, which ended
October 28, rocketed upward to $132.1 million, from $30.1
million in the year-earlier period. Net income increased to
$27.2 million, from only $3.9 million a year ago. Earnings per
share jumped to $0.22, from last year's $0.03 per share, ahead
of consensus estimates of $0.20 per share. The company also
announced a 2-for-1 stock split that will take effect on
December 22, its third split since it became a public company in
May 1999.

Brocade makes switches and other equipment for data storage
networks, and has rapidly increased its market share, from about
30% a year ago to almost 60% today. The company's stock has
grown almost as quickly, up about 75% for the year as of
yesterday's close. The shares have declined in recent weeks,
along with several other data storage companies, due to concerns
over valuation, slowing economic growth, and increasing
competition in the data storage market.

Nevertheless, Brocade is quite bullish about its future. The
company projects revenue will grow 150% to $830 million in
fiscal 2001, and that gross margins will remain at 60%. The
company's CEO, Greg Reyes, noted that "We just happen to be
serving a market segment that is one of the fastest-growing
market segments on the face of the planet and what I think will
emerge as the next major networking category."

Despite the positive results, the company's shares, which fell
4.5% yesterday in advance of the earnings report, traded down
further in after-hours activity, as investors become
increasingly nervous about richly valued technology stocks. As
one analyst told Reuters, "I would think [the stock price] would
go up, but oh well.... The market environment we are in is not
normal.''

For more information on the data storage industry, check out the
Fool's computer hardware sector page. In addition, data storage
software companies are analyzed in this year's Industry Focus.
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AFTER-HOURS COVERAGE
GATEWAY WARNS OF DOWNBEAT Q4, 2001
By David Marino-Nachison
PC direct seller Gateway (NYSE: GTW) has historically looked
forward to a strong start to the holiday selling season, but
that didn't happen this year. Now the company not only forecasts
a disappointing fourth quarter but upcoming year as well. FULL STORY>>>
http://www.fool.com/m.asp?i=220745
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NEWS TO GO

Telecom giants AT&T (NYSE: T) and NTT DoCoMo officially
announced their widely rumored partnership today, with the
Japanese mobile communications services provider agreeing to
purchase 16% of AT&T Wireless (NYSE: AWE) for $9.8 billion. AT&T
Wireless, currently a tracking stock, will receive $6.2 billion
and AT&T will receive $3.6 billion in cash. The purchase values
AT&T Wireless at $23.50 per share, a 31% premium over
yesterday's closing price. DoCoMo, which means "everywhere" in
Japanese, has been taking minority stakes in wireless service
providers around the world as part of its strategy to extend its
services internationally. The two companies also announced that
AT&T Wireless would form a wholly owned subsidiary to develop
mobile data and multimedia services similar to DoCoMo's wildly
successful i-mode service. AT&T Wireless, the third-largest
wireless service provider in the U.S., also said it would
introduce third-generation (3G) data services in 2002, using the
same W-CDMA standard that DoCoMo is planning to use.
http://www.fool.com/m.asp?i=220746

Leading local phone company Verizon (NYSE: VZ) yesterday
announced that it has canceled plans to buy a majority stake in
floundering DSL provider NorthPoint Communications (Nasdaq:
NPNT), after NorthPoint restated third-quarter financial results
on November 20, lowering sales by about 20%. Like its fellow DSL
provider Covad Communications (Nasdaq: COVD), which also reduced
previously announced sales earlier this month, NorthPoint blamed
the restatement on non-payment from financially strapped
customers. Nevertheless, Verizon believes it can terminate the
deal as a result of the changes in NorthPoint's business and
financial condition. NorthPoint's CEO said that she may seek
"legal remedies."

Struggling retailer Gap (NYSE: GPS) fell in after-hours trading
upon reporting a 1% same-store sales drop for the month of
November, thanks largely to declines in its Banana Republic and
Old Navy stores. The company also said that it is "cautious" in
its outlook about next quarter's sales and earnings. Gap's
earnings have fallen for the past two quarters.

Programmable computer chip maker Altera (Nasdaq: ALTR) yesterday
warned for the second time this month that revenues would slow
in upcoming quarters, causing the company's shares to fall
sharply in after-hours trading. The company said in a conference
call that sales for the fiscal fourth quarter would be flat
sequentially, and that first-quarter 2001 sales would increase
less than 5%, down from an 84% revenue increase in the third
quarter. Overall, the company estimates that revenues for fiscal
2001 will grow 35%, below current estimates for 49% growth for
the year. The company blamed inventory buildup at contract
manufacturers for the slowdown. "November was an awful month,"
said CEO Rodney Smith.
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