Investors Not Sold on McData Deal

Wall Street has been unhappy with McData ( MCDTA) for some time, and buying Computer Network Technology ( CMNT) on Tuesday has not put smiles on the faces of investors.

Shares of the storage-networking gearmaker were headed for another losing day Wednesday, and if the stock does close in negative territory, it will be the eighth time in the last 10 sessions. In recent trading, McData's shares were off 16 cents, or nearly 4%, to $3.91 -- a 30% slide since the beginning of the month and a new 52-week low.

McData is paying for the acquisition with a combination of stock and the assumption of debt totaling about $235 million. The company expects it to close in the second quarter.

Company CEO John Kelley said the acquisition will solidify McData's position as leader in the highly competitive market for switches used in storage networks.

But Wall Street isn't at all sure the acquisition will work. When rumors regarding the deal surfaced late last week, shares tumbled.

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