Barron's says the wireless-dependence of iPod's latest offerings portend a boon for Wi-Fi chip-makers like Atheros Communications. American Technology Research analyst Shaw Wu forecasts $1 billion in revenues by 2009-2011, double the current analyst consensus. Wu sees consumer electronics as the growth driver for Atheros, expecting it to gain a 10% market share, up from its current 3-5%, in a $10-$12 billion market by 2011. Shares have almost doubled since last September, though they are down 15% from July's $34 to $29. Atheros got hit along with other companies providing Personal Access System chips for cellular service in developing countries. But PAS chips account for just 5% of the company's revenues. Shares trade at a 22.7 times forward P/E, and Atheros sits on $4/share in cash with no debt. Competition between chip-makers isn't a big concern for Atheros -- it's focused on smaller, cheaper wireless and Bluetooth products. If anything, its size and niche market may invite suitors. Wu sees a $40 price target.
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