Ashraf Eassa
Long/short equity, contrarian, independent research, tech

Cavium Networks: A High Growth Networking Play With The Best ARM Server Play Built-In

Cavium Networks (NASDAQ:CAVM) is a developer of specialty, high performance semiconductor products for networking applications. While the company's shares are down meaningfully from their recent highs due largely to Cisco's (NASDAQ:CSCO) recent weakness (Cisco is Cavium's largest customer), I believe that this weakness represents a compelling buying opportunity for growth-oriented tech investors.

Thesis

    Cavium's core specialty network processor business is growing, benefitting from both secular trends as well as share gains There is solid operating leverage in the business model, and management has been able to grow revenues at a rate meaningfully higher than opex While core networking chip business is attractive (and could in itself support a meaningfully higher share price), success in the emerging ...
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