NEW YORK ( TheStreet) -- It's official, I'm going to file network equipment maker Brocade (BRCD - Get Report) at the top of my list of buyout candidates for 2013. This is a list that also includes (among others) Palo Alto Networks (PANW - Get Report).Although Brocade has performed quite well this year, the market seems to show no interest in discussing the company's prospects unless it involves M&A speculation. And it seems that the company's strong fourth-quarter performance has only served to fuel that fire.
Q4 was an excellent quarter for Brocade and a strong ending for fiscal 2012 during which we established a number of company records including revenue, net income and operating cash flow. Our product portfolio across all areas of our business is the strongest it has ever been and we are driving industry transformation in emerging areas of growth including virtualized data center, cloud computing and software-defined networkingAfter such a strong performance, it's hard to disagree. Although Brocade lags behind bigger rivals such as Cisco (CSCO - Get Report), the company is clearly outperforming Dell (DELL) and Hewlett-Packard (HPQ - Get Report). But I wonder how long this performance can last without some type of a trip-up due to the expected change in leadership now that Klayko is leaving. It goes without saying that the strategic direction of the company will be determined by Klayko's replacement. That said, it's hard to imagine a better time than now for M&A speculation. Cisco remains at the top of my list of suitors. Not only does Cisco have the financial means, but equally important are the synergies that align very well.