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October 27, 1995

EMC SNAPS UP IBM’s KEY ESCON OEM SUPPLIER McDATA

By CBR Staff Writer

In an extraordinarily cheeky bit of business, Hopkinton, Massachusetts-based EMC Corp has muscled in to snap up McData Corp, Broomfield, Colorado – and it turns out that McData supplies a crucial part of IBM Corp’s Escon channel extender under an OEM agreement. EMC has agreed to pay $230m in shares for privately-held McData, with more than $50m of that covered by McData working capital, most of which is cash and accounts receivable. EMC expects the acquisition to add $0.08 to $0.10 a share to its 1995 earnings. Founded in 1982, McData has 150 employees and expects 1995 revenues to exceed $150m. The Escon Director, marketed by IBM under an exclusive OEM agreement, is a high-speed fibre-optic network switch designed to connect computers and peripherals within a data centre. EMC reckons McData’s communications expertise will help position it at the centre of the networked data centre and open systems worlds. EMC plans to run McData as a wholly-owned subsidiary.

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