Last week, Cisco (CSCO) unveiled its new ASR 9000 edge router. The new product, with an advertised capacity of 400 gig per slot and system capacity of 6.4 terabytes has six times the capacity of competing products from Juniper (JNPR)(MX-series), Alcatel-Lucent (ALU) (7750) and Ericsson (ERIC) - Redback (RBAK) (SmartEdge series).

While Cisco continues to make investments in its widely deployed but aging Series 7600 router, the ASR 9000 appears to have been built as the successor to this product. The 7600 router starting shipping in 2001 and was built primarily for routing latency-tolerant data traffic over data networks, while the ASR 9000 was purpose built for handling video traffic and to accommodate today’s multi-service (voice, video, and data) IP telecom networks. The ASR 9000 has the raw throughput capacity, the content delivery capability, and the packet processing intelligence to, in Cisco’s words, “deliver high definition video stream to every household in Los Angeles (1.2 million) simultaneously.”

Last Thursday after the close, Anadigics—a supplier of RF components to the handset and cable set-top box markets—cut its forecast for third quarter revenue from $78 million to $64 million, 18 percent lower than the guidance management established a mere three weeks prior (see Q2 earnings call transcript). 

Predictably, ANAD shares were hammered Friday as the stock lost 38 percent of its value.  Equally as predictable, sell-side analysts limited their analysis of the situation at Anadigics to the near-term implications of the operating issues brought to their attention by management while, in our opinion, ignoring what we believe are larger existential threats to Anadigics that are in the process of surfacing.  

As investors in emerging growth companies (public and private), we always steel ourselves to the likelihood that no matter how compelling or seemingly inevitable a new technology appears, for countless reasons its market adoption invariably takes longer, and usually much longer, that we initially expect. 

QuickLogic (QUIK) has treated us to another such occasion as we have waited for the better part of three years for its new products to get design and revenue traction in the wireless handset market.  We believe the company now has a revenue-rich design activity pipeline that suggests the wait may be coming to an end. 

Over the past several weeks, the markets have sobered up to the unpleasant reality that the implosion of the twin bubbles of residential real estate and credit is still an ongoing phenomenon and remains a primary risk to the economy. As the likelihood for a second half recovery diminishes, the prospect for softer economic growth, if not outright recession, has weighed on the outlook for corporate earnings and stock prices. The challenge for investors in this environment is to find those companies with earnings that are most resilient to a weak macro-economy.

We believe that current trends and dynamics within the telecom networking sector will make merchant providers of network processors—namely, Cavium (CAVM), Netlogic (NETL), and EZchip (a wholly owned subsidiary of LanOptics (EZCH))—relatively immune to macro-economic troubles.