ARGUS Downgrades Foundry Networks (FDRY) to Sell
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ARGUS downgrades Foundry Networks (Nasdaq: FDRY) from Hold to Sell.
ARGUS analyst says, "Foundry has agreed to be acquired by BUY-rated Brocade Communications Systems Inc. Brocade has offered approximately $19 per share, representing a roughly 40% premium to FDRY's closing price of $13.66 on July 21, 2008, prior to the deal announcement. We expect the deal to go through; the two companies are in complementary rather than overlapping markets, and neither is a dominant industry player. Nonetheless, the extremely negative response by BRCD shareholders is a reminder that no deal is a done deal until it closes. At this time, we see greater downside risk to the FDRY shares than upside potential from current levels, approximately $1 below the offer price of $19. We will continue to monitor the FDRY share price in relation to the takeout price, and will consider adjustments in our rating on this basis. For now, however, a near-term SELL rating appears prudent."
Foundry Networks, Inc. (Foundry) designs, develops, manufactures, markets and sells switching and routing solutions designed for wired and wireless local area networks (LANs), metropolitan area networks (MANs), wide area networks (WANs), in addition to other infrastructure products for both enterprise networks and the Internet.
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