Seeking Alpha

Cavium slides; Nomura sees major challenges ahead

  • Nomura is reiterating a Reduce on Cavium (CAVM -2.9%), and thinks the company faces major 2014 headwinds.
  • Among them: The potential of the Cisco's acquisition of Sourcefire to hurt sales - whereas Sourcefire has been a buyer of Cavium's network processors, Cisco relies heavily on home-grown ASICs - and the potential for Cavium's Project Thunder (developing ARM-based server CPUs) - to fail to meet expectations.
  • SA contributor Ashraf Eassa recently made a bull case for Cavium in which he argued (among other things) Project Thunder's differentiated approach to the ARM server market - AMD, Marvell, and AppliedMicro are also targeting this space - could allow it to succeed. Instead of trying to compete head-on against Intel's dominant Xeon CPUs, Cavium is targeting a variety of niche applications where its integration of dedicated circuitry for specific tasks (i.e. offload engines) helps it stand out.
  • Shares rallied earlier this week on hopes Avago's acquisition of network processor vendor LSI would lead to M&A interest in Cavium.
Comments (1)
  • Fair concerns, for sure.
    20 Dec 2013, 05:15 PM Reply Like
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