NEW YORK (Reuters) – Hedge funds have piled out of Brocade Communications Systems Inc <BRCD.O> this year on weak sales and fading hopes for a buyout, making the stock look like a bargain.

But analysts caution against expecting too much of a rebound until the company shows stronger business results.

Andreas Halvorsen’s Viking Global Investors, Lee Ainslee’s Maverick Capital and Chris Shumway’s Shumway Capital Partners were among major equity-oriented hedge funds that sold Brocade shares in the first quarter, according to recent regulatory filings.

That made Brocade one of the top stocks dumped from the portfolios of 30 of the largest equity-oriented hedge funds in the quarter, Thomson Reuters data showed.

Brocade shares enjoyed a strong run-up through most of 2009 as investors bet the company would be acquired and a recovering global economy would lift sales of its communications switches and other networking infrastructure equipment.

But investors counting on a buyout were disappointed as potential bidders skipped over Brocade even as they shopped for niche technology firms. Hewlett-Packard Co <HPQ.N> last November chose to acquire 3Com instead.

Brocade’s last two quarterly reports have also let down investors, and few analysts see the shares rising above their 52-week range of $5 to $10 over the next several months.

NEW YORK/BOSTON (Reuters) – IBM <IBM.N> plans to buy Sterling Commerce from AT&T Inc <T.N> for about $1.4 billion in cash, extending the technology behemoth’s portfolio of business software.

The move comes amid a flurry of software acquisitions by International Business Machines Corp, Oracle Corp <ORCL.O> and SAP AG <SAPG.DE>, as they look to sell a broad set of products and services to large corporations.

IBM said earlier this month it plans to spend $20 billion on acquisitions through 2015, shifting its focus to software from hardware. It bought PwC Consulting from PricewaterhouseCoopers in 2002 and sold its personal computer business to Lenovo Group <0992.HK> in 2005.

Sterling provides software and networking services that help companies securely transfer electronic documents such as purchase orders, payroll information, invoices and healthcare claims. It is the No. 2 player in the field after privately held GXS.

IBM currently does not have that technology in house, said Forrester Research analyst Ken Vollmer, who predicted that Oracle might be forced to respond by acquiring another provider of such products.

Oracle currently offers such technology through a partnership with privately held E2open, according to Gartner analyst Benoit Lheureux.

AT&T expects to record a one-time gain of about $750 million in the quarter the transaction closes.

SAN FRANCISCO (Reuters) – When Tom Georgens took over over as CEO of storage equipment maker NetApp Inc <NTAP.O> last August, the technology sector was in the midst of a record decline.

He navigated the company as it emerged from the economic storm, watching its stock price climb 56 percent in nine months, nearly triple the gain of rival EMC Corp <EMC.N>.

NetApp storage boxes plug into computer networks in a way that the company says is simpler than rival technology.

Georgens is planning to plough money into expanding sales and engineering, rebutting the question that he called “Is NetApp investing off a cliff?” with the argument that NetApp may never again have such a chance to win over customers.

“Crisis is the easiest time to manage because the objectives are clear. If you are drowning, the objective is to swim. If you are on fire, the objective is to put it out. Now it’s like, ‘we dodged that bullet, life is good.’”

His goal is deliver average annual revenue growth of 15 to 20 percent.

“It’s a challenging number, and it’s an achievable number,” he told the Reuters Global Technology Summit in San Francisco on Tuesday. “If we get there, it’ll be a good outcome for the company, certainly better than any acquisition.”

SAN FRANCISCO (Reuters) – Cisco Systems Inc <CSCO.O> is testing a consumer version of its TelePresence videoconferencing system and expects to begin selling the product late this year for around $500.

Cisco already sells high-end videoconferencing systems to businesses for as much as $300,000 per unit, and analysts have said its challenge would be to come up with a more affordable version.

“You would just plug it into your television,” Robert Lloyd, Cisco’s executive vice president overseeing worldwide operations, said of the consumer version.

“Probably the market would be looking at something like that in the $500 range,” he told the Reuters Global Technology Summit in San Francisco on Thursday.

Technology companies have been trying to turn television sets into more interactive machines, hoping to win over Web surfers who are already migrating from personal computers to mobile devices.

Google Inc <GOOG.O>, for example, on Thursday showed off its Web TV effort, aiming to add a search box — like on Google’s website — to some Sony Corp-built <6758.T><SNE.N> TVs this holiday season. The TV search box looks through live programs, DVR recordings and the Web, delivering a relatively compact list of results that can be accessed with a push of the button. Pricing was not available.

Some analysts said a $500 consumer TelePresence system is unlikely to win mass appeal for Cisco, given the plethora of lower-cost Web-based videochat services already in the market from the likes of Skype, Google and Apple Inc <AAPL.O>.

SAN FRANCISCO (Reuters) – Dell Inc’s <DELL.O> quarterly sales and profit beat expectations but its gross margin fell short of analysts’ forecasts and the computer maker warned that components supply will remain tight.

Dell, whose shares fell 3 percent after the results on Thursday, has been struggling to boost profitability due to both sales of lower-cost personal computers and higher costs of components, including memory.

Analysts said the results show Dell still had a ways to go in shifting to higher-margin businesses, despite its recent acquisition of technology services company Perot Systems.

“They delivered on revenue, but the Street was expecting a stronger margin recovery,” said Ashok Kumar, analyst at Rodman & Renshaw.

Dell’s quarterly gross margin, excluding special items, rose to just 17.6 percent in its fiscal first quarter, from 17.4 percent in the previous three months. The market had expected 17.7 percent, according to Thomson Reuters I/B/E/S.

“Clearly there are issues with commodity pricing,” said Shannon Cross at Cross Research. “But they need to show more leverage in the model. Dell needs to find a way to drive more margins.”

Dell Chief Financial Officer Brian Gladden told analysts on a conference call that the supply of components would continue to be relatively tight.

SAN FRANCISCO, May 20 (Reuters) – Dell Inc’s <DELL.O> quarterly sales and profit beat expectations but its gross margin fell short of analysts’ forecasts and the computer maker warned that components supply will remain tight.

Dell, whose shares fell 3 percent after the results on Thursday, has been struggling to boost profitability due to both sales of lower-cost personal computers and higher costs of components, including memory.

Analysts said the results show Dell still had a ways to go in shifting to higher-margin businesses, despite its recent acquisition of technology services company Perot Systems.

“They delivered on revenue, but the Street was expecting a stronger margin recovery,” said Ashok Kumar, analyst at Rodman & Renshaw.

Dell’s quarterly gross margin, excluding special items, rose to just 17.6 percent in its fiscal first quarter, from 17.4 percent in the previous three months. The market had expected 17.7 percent, according to Thomson Reuters I/B/E/S.

“Clearly there are issues with commodity pricing,” said Shannon Cross at Cross Research. “But they need to show more leverage in the model. Dell needs to find a way to drive more margins.”

Dell Chief Financial Officer Brian Gladden told analysts on a conference call that the supply of components would continue to be relatively tight.

SAN FRANCISCO (Reuters) – Brocade Communications Systems Inc <BRCD.O> is optimistic that pent-up demand will fuel recovery in the tech sector although there are still reasons to be wary, a senior executive said on Monday.

Brocade’s chief marketing officer John McHugh said the network equipment maker is not looking for a buyer and is in good financial health, even though analysts have cited its more than $1 billion in debt as a concern for a company with a market value of just $2.9 billion.

“There are a lot of good fundamentals that are starting to fall into place,” McHugh told the Reuters Global Technology Summit in San Francisco. “There’s a belief that there is pent-up demand, that people have been, for the last 12 months or so, sitting on capital budgets.”

He said there are, however, various issues hindering more aggressive capital spending, warranting a measured stance.

Brocade reports its latest quarterly results on Thursday and McHugh declined to give more details.

Network equipment makers have suffered from components shortages as demand picked up but supply has been constrained by cutbacks during the downturn.

McHugh said the worst was likely over, but he did not expect significant hikes in supply in the near term.

NEW YORK (Reuters) – Cisco Systems Inc’s quarterly results topped Wall Street forecasts as a global economic recovery encouraged companies to upgrade their networks, but CEO John Chambers’ cautious tone prompted investors to sell the shares.

Chambers said that while the company was making the most of improving business sentiment and was gaining market share, there was still need for some caution as U.S. employment data was still weak.

He also said he would keep an eye on Europe — which accounts for more than 20 percent of Cisco’s revenue — even though recent worries over sovereign debt didn’t appear to be escalating.

“Given all the uncertainties regarding the strength and shape of the recovery, concerns about the recovery possibly slowing and the unknown extent of job creation, we encourage you to wait for additional economic data before becoming too optimistic,” Chambers told investors on a conference call.

Cisco’s stock fell 2.2 percent to $26.15 in extended trading, giving up some of its 3 percent gain on Nasdaq earlier. Investors said the market’s recent turbulence may be making investors act cautiously.

The stock had gradually risen since the start of the year, peaking on April 30 at $27.74 — a level not seen since 2007 — before falling dramatically in last week’s market selloff, sparked in part by concerns that Greek’s sovereign debt woes would spread through the Europe.

“Cisco’s stock has had a tremendous run, so the Street was maybe hoping for even greater guidance. Also, there will continue to be some uncertainty around Europe,” said Edward Jones analyst Bill Kreher.

NEW YORK (Reuters) – Cisco Systems Inc’s <CSCO.O> quarterly results topped Wall Street expectations and Chief Executive John Chambers said the network equipment maker is gaining market share as the global economic recovery accelerates.

Chambers, however, also cautioned investors to wait for more economic data before becoming too optimistic, and shares of the company fell 3 percent in extended trading after gaining 3 percent on Nasdaq earlier on Wednesday.

“Given all the uncertainties regarding the strength and shape of the recovery, concerns about the recovery possibly slowing and the unknown extent of job creation, we encourage you to wait for additional economic data before becoming too optimistic,” Chambers said on a conference call.

Cisco forecast current-quarter revenue growth of 25 percent to 28 percent year on year. The average Wall Street forecast calls for revenue of $10.68 billion, which would be up about 25 percent from the year-earlier period.

The world’s biggest maker of routers and switches said its revenue in the fiscal third quarter through May 1 rose 27 percent to $10.4 billion, above the average analyst estimate of $10.2 billion, according to Thomson Reuters I/B/E/S.

Quarterly profit rose to $2.2 billion, or 37 cents per share, compared with $1.3 billion, or 23 cents a share, a year earlier. Excluding items, profit was 42 cents per share — higher than Wall Street’s forecast for 39 cents per share.

“It was a good solid quarter for a major company that tends to not have big positive surprises any more,” said Tim Ghriskey, chief investment officer of Solaris Asset Management, though he noted that Cisco’s margin might have disappointed some.