1. University of Colorado M.B.A Program September 26, 2007

2. Who is Ernie Sampias? 30+ years experience in financial/operational roles  Current CFO, Quark, Inc.  Current Audit Committee Chair and Board Member, Xyratex, Ltd.  Previously…  CFO for McData – 4 years  CFO for US West Dex Yellow pages – 3 years  CFO for Spectralink (Boulder) – 1 year Certified Public Accountant License – Indiana M.S. Taxation, De Paul University – Chicago B.S. Business, Indiana University - Indiana

3. Why is Ernie Speaking to Your MBA Class? 1) Sanjai Bhagat asked me to… 2) Hopefully…can share one of my financial learning experiences (mistakes) with you as part of your learning experience. Questions?

4. Situation Timeframe….early 2001 – 2002  EMC spins out McData as a separately traded public company to capture major financial gain on new “Storage Area Network” (SAN) Technology, i.e. McData  EMC establishes OEM agreement with McData…initially accounts for 70% of McData’s $300 mil of revenue in 2001  McData dominates high end of SAN market with its “Director” class SAN switch products sold through OEMS: EMC 70% IBM 20% HDS,Others 10%  Brocade (San Jose, CA) IPO’s and dominates low-end of SAN switch market.  Both McData and Brocade experience 20% unit growth and revenue growth annually  Intense rivalry between both CEO’s!!!

5. Situation Continued Timeframe….early 2003 – 2004  McData R&D creates a breakthrough in low-end SAN switch technology and takes share from Brocade  Brocade develops high-end director class SAN product and begins to take share from McData  Both competitors enjoy double digit unit growth and revenue growth annually  Summer, 2004…Cisco creates a “Spin-In” SAN division focused at high-end market, i.e. director class switches  McData becomes extremely concerned regarding rumors of Cisco’s first director class products  McData evaluates IT R&D alternatives for “One-Upping” Cisco’s rumored first product launch  McData raises $172 mil cash with convertible debt  McData buys 2 tech start-ups in San Jose, CA for $200 mil to be at technology parity or better with Cisco

6. So what happened next???