Darspal S Mann
Long/short equity, growth at reasonable price, special situations, deep value

Fading Concerns And High Growth Should Take EZchip Higher

After years, EZchip Semiconductor Ltd. (EZCH) is uniquely positioned to benefit from accelerated revenue growth and a predictable product roadmap. While the company's fourth generation network processor is experiencing peak production growth rates, the fifth generation is expected to start production next quarter and the sixth generation is scheduled for sampling later this year. Fundamentally, the business has high operating leverage and a solid balance sheet, both of which should get a boost from development expenses tapering off, in addition to top-line growth.

The new products are designed to expand the available market size, carry a higher selling price and diversify revenues. There may be mixed signals about the timing and size of the macro router capital expenditure cycle,...

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