Feb. 12, 2014, 12:05 AM
Feb. 11, 2014, 5:30 PM
Dec. 17, 2013, 2:57 PM
- Avago (AVGO +7.6%) is now up 18% (good for a $2.1B increase in market cap) since announcing a $6.6B deal to acquire LSI yesterday morning. Many of its chip industry peers have also rallied; the Philadelphia Semiconductor Index (SOXX +1.2%) is up 2.5% over the last two days.
- The sharply contrasting nature of Avago and LSI's product lines - Avago depends heavily on RF and optical component sales, while LSI depends on storage controllers/adapters and network processors - could be fueling hopes other chipmakers will use M&A to expand their product lines and achieve greater scale.
- Today's notable gainers include EZchip (EZCH +6.7%), OmniVision (OVTI +3.6%), Skyworks (SWKS +3%), Cavium (CAVM +3%), Audience (ADNC +5.8%), Cirrus Logic (CRUS +3.4%), and Semtech (SMTC +3%). Cirrus and OmniVision, which both depend heavily on Apple orders, might also be getting a boost from a positive Q4 pre-announcement from Germany's Dialog Semi (gets ~70% of its sales from Apple).
- Several firms have hiked their Avago PTs in response to the LSI deal, which is set to be financed with $4.6B in debt and a $1B convertible note investment from Silver Lake (conversion price of just $48.04). Nomura expects the deal to lift Avago's 2015 EPS by $1.00-$1.50; Avago is promising $200M/year in synergies by the end of FY15 (ends Nov. '15). RBC thinks FY15 EPS of ~$5 is possible; the consensus is at $3.89.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Nov. 14, 2013, 10:13 AM
- The list of enterprise hardware/software, telecom equipment, and component/chip suppliers selling off (previous) due to Cisco's poor guidance and order data now includes Oracle (ORCL -2.4%), EZchip (EZCH -6.1%), Riverbed (RVBD -6%, shot higher yesterday on M&A hopes), NeoPhotonics (NPTN -6.6%), Ixia (XXIA -4.7%), Oclaro (OCLR -4%), Procera (PKT -2.3%), and Alliance Fiber (AFOP -3.8%).
- Cisco's weak service provider (-13% Y/Y) and emerging markets (-12%) orders are worrying investors in peers/suppliers, particularly given some peers (I, II) have also reported of soft carrier and/or EM demand. John Chambers' admission the NSA spying scandal has affected sales in China (orders -18%) also isn't going over well.
- However, many on the sell-side argue a big portion of Cisco's problems are tied to company-specific product issues.
- H-P (HPQ -5.6%), which has plenty of Chinese exposure, has added considerably to yesterday's AH losses, and so have Ciena (CIEN -5.3%) and Finisar (FNSR -10%). H-P's FQ4 report is due on Nov. 26, and Ciena's FQ4 report arrives on Dec. 12.
Nov. 13, 2013, 8:34 PM
- Cisco's (CSCO) dispiriting Jan. quarter guidance and Oct. quarter order data has produced an AH selloff in enterprise IT and telecom equipment names, as well as a couple of the companies supplying them. NetApp's below-consensus guidance might not be helping either.
- HPQ -2.1% AH. IBM -1.1%. ALU -2%. FFIV -1.9%. CIEN -0.9%. CAVM -3%. BRCM -1.3%.
- Cisco's slumping FQ1 service provider (-13% Y/Y) and emerging markets (-12%) orders are bound to fuel concerns about carrier capex and macro trends. At the same time, it's worth noting Juniper and Alcatel-Lucent have been seeing better router sales to carriers (though not to Asia), and that Huawei has been doing better in emerging markets.
- The rest of Cisco's order data for major regions and customer groups was relatively better, but not exactly encouraging. Americas orders -2%, EMEA -4%, Asia-Pac (hurt by emerging markets weakness) -9%. Enterprise orders +2%, commercial (SMBs) +1%, public sector -1%.
- Switch sales (31% of revenue) rose 3% Y/Y, while routers (17% of revenue) fell 1%. Collaboration rose 1%, and service provider video fell 14% due to set-top weakness. Cisco's ASR 9000 edge router line, which EZchip (EZCH) supplies network processors for, grew 20% in FQ1 vs. 43% in FQ4.
- Data center (UCS servers) had another strong quarter, growing 44%, but still only accounts for 5% of revenue. Wireless (dominated by Wi-Fi gear) grew only 8% after growing 32% in FQ4 (could be a negative for ARUN and RKUS).
- John Chambers was asked on the CC (transcript) if the NSA spying uproar was affecting Cisco. He admitted it's a problem in China, but denied it was a major issue elsewhere.
Nov. 6, 2013, 8:02 AM
Nov. 6, 2013, 12:05 AM
Nov. 5, 2013, 5:30 PM
Sep. 24, 2013, 12:45 PM
Sep. 24, 2013, 12:24 PM
- At a launch event for its new NCS core router line, Cisco (CSCO -0.5%) states its recently-announced nPower X1 network processor (NPU) won't displace EZchip's (EZCH +17.1%) NPUs.
- EZchip shares, which tumbled when the X1 was originally announced, have shot higher. Oppenheimer had estimated the nPower X1 could hurt EZchip's top line by 20%-25% if used in future Cisco edge routers; the chipmaker issued a statement attempting to soothe investor fears.
- Cisco states the X1, which (per John Chambers) cost $250M to develop, will power the NCS line, as well as its mainstay CRS-X core routers.
- As previously reported, the NCS line is meant to provide better support for diverse traffic loads than the CRS-X line. Cisco touts the programmability of its new hardware, as well as its advanced management tools (both physical and virtual resources can be provisioned across systems) and support for the company's ONE SDN platform (will eventually cover Cisco's entire switch/router lineup).
- The high-end NCS 6000 supports line cards with densities up to 1Tbps; that exceeds the 400Gbps supported by the CRS-X and supports arguments the former will be viewed as a replacement for the latter, even if it isn't officially marketed as such.
- The NCS 6000 is already shipping, as is a complementary 100G optical transport system known as the NCS 2000. Japan's KDDI and Australia's Telstra are among the first clients. A less powerful router known as the NCS 4000 will ship in 1H14.
- Juniper (JNPR -1.2%), whose successful PTX Series routers are being targeted by the NCS line, is ticking lower.
Sep. 17, 2013, 9:32 AM
- "To the best of EZchip's (EZCH +7.5%) knowledge Cisco intends to use EZchip's NP-5 in all key platforms that use the NP-4 today, and Cisco has not yet made a decision on any NPU beyond NP-5 in those platforms." Those comments are in-line with a remark CEO Eli Fruchter made to Benchmark in the wake of Cisco's nPower X1 announcement. (PR)
- EZchip also once more talks up the potential of its NPS-400 processor (previous), declaring it will offer "the highest integration and greatest power efficiency," of any NPU, as well as the most advanced traffic manager and the ability to "support the greatest number of flows and subscribers." The NPS-400 is expected to start generating revenue in 2015.
- Regarding ZTE, the company doesn't specifically deny Maxim's report of a Broadcom design win, but does state ZTE plans to use the NP-5 "as a follow on" in platforms using the NP-3 and NP-4 to the best of its knowledge, and that the NP-5 "is also in consideration for other [ZTE] platforms as are other NPUs from other vendors."
- Shares still -23% from where they traded before Cisco's announcement.
Sep. 16, 2013, 1:16 PM
- Maxim's Ashok Kumar reports ZTE will use a Broadcom (BRCM +2.9%) network processor (NPU) in upcoming edge routers, displacing traditional ZTE supplier EZchip (EZCH -6.6%). While EZchip slumps thanks to Maxim's note and an Oppenheimer downgrade, Broadcom is heading in the opposite direction.
- In its Q2 CC, EZchip stated its sales to ZTE fell 21% Q/Q and 54% Y/Y to $1.7M. However, that was still good for 10% of the chipmaker's Q2 sales. CEO Eli Fruchter added his company "[continues] to see a lot of activity at ZTE," and predicted EZchip's sales to the Chinese networking firm would be up significantly Y/Y in 2013.
- Broadcom's NetLogic unit (recently the subject of a $461M write-down) announced its XLP980 NPU this June to favorable commentary. The chip leverages TSMC's 28nm manufacturing process and delivers 160Gbps of throughput. EZchip's NP-4 chip offers 100Gbps of throughput, and the next-gen NP-5 240Gbps.
- Prior to the XLP980 announcement, SA contributors Value Bulldog and Kerrisdale Capital were already arguing Broadcom's NPU efforts threatened EZchip.
- Discussing its EZchip downgrade, Oppenheimer predicts EZchip's Juniper sales will fall 52%, offsetting a 36% increase in sales to Cisco and a 15% increase for everyone else. It also thinks EZchip's profits could be hurt by 20%-25% if Cisco uses the nPower X1 in future edge routers.
Sep. 16, 2013, 12:46 PM
Sep. 16, 2013, 9:45 AM
- American Tower (AMT +1.6%) has been upgraded to Buy by Nomura 10 days after the company announced its $4.8B purchase of Global Tower Partners. Nomura apparently has a different view of the cell tower owner than Muddy Waters.
- EZchip (EZCH -1.1%) has been cut to Market Perform by Oppenheimer four days after Cisco unveiled its nPower X1 network processor.
- Gigamon (GIMO -3.3%) has been cut to Market Perform by Raymond James.
Sep. 12, 2013, 12:45 PM
Sep. 12, 2013, 10:38 AM
- Cisco (CSCO +0.2%) asserts its nPower X1 network processor (NPU) delivers 400Gbps of throughput (matching ALU's oft-praised FP3), and was "purpose-built" for software-defined networking (an unmatched level of programmability is promised). (PR)
- EZchip (EZCH -22.4%) investors aren't taking the news well. Cisco is the NPU developer's top client, and strong sales of Cisco's ASR 9000 edge router (uses EZchip's NP-3/NP-4 processors) have done wonders for EZchip's top line. Cisco's announcement raises the possibility the X1 will be used in the ASR 9000's successor.
- EZchip disclosed on its Q2 CC Cisco accounted for 46% of its quarterly revenue. Sales to the networking giant rose 55% Q/Q and 33% Y/Y, and were forecast to "grow significantly" Y/Y in 2013.
- Benchmark is defending EZchip after talking with CEO Eli Fruchter. Fruchter: "To the best of our knowledge, Cisco will use the [240Gbps] NP-5 in all key platforms that use the NP-4 today."
- While many rivals increasingly rely on 3rd-party NPUs (from EZchip, Broadcom, Cavium, etc) Cisco continues to invest heavily in developing proprietary ASICs to differentiate certain switch/router lines.
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