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Mellanox Technologies, Ltd. (MLNX)

  • Tue, Nov. 17, 8:25 AM
    • Four days after EZchip (NASDAQ:EZCH) announced it's postponing a shareholder vote on Mellanox's (NASDAQ:MLNX) planned $25.50/share ($811M) acquisition of the company and has been offered a 30-day go-shop period and termination fee waiver, the company states it has signed off on the revised agreement.
    • Should no superior offer arrive during the go-shop period, EZchip shareholders will vote on the deal at a Jan. 19 meeting (Dec. 18 record date). EZchip sees the deal closing in Q1.
    • With shares having closed yesterday at $24.04, EZchip remains 5.7% below Mellanox's offer price.
    | Tue, Nov. 17, 8:25 AM | 6 Comments
  • Thu, Nov. 12, 10:53 AM
    • Following pressure from activist Raging Capital to get a better deal, EZchip (EZCH +2.6%) has postponed a shareholder vote on Mellanox's (MLNX +0.9%) planned $25.50/share ($811M) acquisition of the company. The vote was set for today's shareholder meeting.
    • In addition, Mellanox has granted EZchip a 30-day go-shop period to solicit alternative bids, and has waived its rights to a deal termination fee.
    • Mellanox is affirming its $25.50/share, all-cash, offer. EZchip has risen to $24.55 on today's news.
    | Thu, Nov. 12, 10:53 AM | 2 Comments
  • Thu, Nov. 5, 3:12 PM
    • Mellanox (MLNX -1.7%) is off moderately after EZchip (EZCH -0.2%), which Mellanox is set to acquire for $811M (provided shareholders approve), posted nearly in-line Q3 results and guided for Q4 revenue of $25M, below a $33.1M consensus. The network processor vendor attributes the outlook to "near-term inventory adjustments across several key customers that are serving the carrier networking space," and insists it isn't reflective of the company's long-term outlook,
    • However, with major shareholder Raging Capital continuing to oppose Mellanox's planned acquisition of EZchip, EZchip is using the guidance to argue in favor of the Mellanox deal. "The fully financed, all-cash, $25.50 per share offer from Mellanox provides EZchip shareholders with immediate and certain cash value. This is in contrast to the headwinds a standalone EZchip could face as we continue to witness further industry consolidation and the moves of major customers toward in-house production for NPS-400 functionality."
    • EZchip has also issued a new PR making a case for a "Yes" vote. Shareholder advisory firm Glass Lewis opposes the deal, while peers ISS and Entropy are in favor of it.
    • Thanks to fears the deal could fall through, EZchip is trading at $24.24, 5% below Mellanox's buyout price.
    • EZchip's Q3 results, PR
    | Thu, Nov. 5, 3:12 PM | 1 Comment
  • Wed, Oct. 14, 2:25 PM
    • In a 13D filing, Raging Capital (6.5% EZchip stake) asserts it's "in the best interest of all stockholders that [EZchip] attempt to negotiate a materially higher sale price with Mellanox (MLNX +0.7%) or other potential acquisition candidates, or refrain from selling the business."
    • Mellanox announced an $811M ($25.50/share) all-cash deal to buy EZchip (EZCH +0.1%) on Sep. 30, and quickly sold off in response. The price represented a 16% premium to EZchip's Sep. 29 close.
    • EZchip currently trades $0.44 below Mellanox's buyout price. The deal is expected to close in Q1.
    | Wed, Oct. 14, 2:25 PM | 5 Comments
  • Wed, Sep. 30, 10:25 AM
    • Mellanox (MLNX -7.3%) has sold off after announcing it's buying network processor (NPU) vendor and Israeli tech peer EZchip (EZCH +14.3%) for $811M in cash. Meanwhile, telecom/data center chipmakers Cavium (CAVM +3.5%), AppliedMicro (AMCC +4.1%), and PMC-Sierra (PMCS +7.9%) are rallying amid a 2% Nasdaq gain - each company's product line includes (but is by no means limited to) NPUs.
    • Whereas Mellanox is focused on high-speed data center connectivity hardware (e.g. adapter cards, switches, switching and adapter ICs), EZchip still gets the majority of its revenue from NPUs going into edge routers and other telecom hardware. However, the company has been trying to expand its data center footprint, via its new NPS processor line (supports deeper packet analysis) and its Tilera unit (acquired in 2014, set to launch a processor supporting 100 ARM cores).
    • Mellanox asserts EZchip's "products and expertise in security, deep packet inspection, video, and storage processing" will help it "deliver complete end-to-end, intelligent 10, 25, 40, 50, and 100Gb/s interconnect and processing solutions for advanced data center and [telecom] edge platforms." The purchase price is equal to 5.9x EZchip's 2016 sales consensus; Mellanox trades for just 2.3x 2016E sales.
    • Update: Summit Research's Srini Nandury thinks Mellanox's selloff stems from the company's failure to reiterate Q3 guidance during today's conference call, in spite of repeatedly being asked by analysts to do so.
    | Wed, Sep. 30, 10:25 AM | Comment!
  • Wed, Sep. 30, 7:51 AM
    • The price works out to $25.50 per share in cash for EZchip (NASDAQ:EZCH) versus last night's close of $21.99.
    • "We expect our combined technologies, and product portfolios to deliver leading end-to-end intelligent interconnect and processing solutions to data centers and wide area networks," says Mellanox (NASDAQ:MLNX) CEO Eyal Waldman.
    • The deal is expected to close in Q1.
    • A conference call is set for 8:30 ET.
    • Source: Press Release
    | Wed, Sep. 30, 7:51 AM | Comment!
  • Thu, May 28, 1:34 PM
    • In a presentation (.pdf) discussing their planned merger, Avago (AVGO -0.4%) and Broadcom (BRCM -2.6%) state they're aiming for a 40% long-term op. margin, up from the 30% collectively possessed by the companies today. Gross margin is forecast to rise to 60% from a current 57%, and R&D and SG&A spend respectively fall to 16% and 4% of revenue from 20% and 7%.
    • Avago and Broadcom, who have $15.1B in revenue between them, are only forecasting a 5% long-term revenue CAGR. However, Avago CEO Hock Tan states the outlook is "probably conservative."
    • Avago plans to partly finance the $17B cash portion of the deal via $9B worth of new debt. The post-merger company is expected to have $15.5B in debt and $1.3B in cash; Broadcom shareholders will have a 32% stake. The deal is expected to close in Q1 2016.
    • Many potential product synergies exist. Among the possibilities: Wi-Fi/Bluetooth solutions that pair Broadcom's combo chips with Avago RF components; server/storage connectivity product lines featuring a mixture of Broadcom's Ethernet transceivers and switching chips and Avago's adapter cards and optical transceivers - Stifel thinks Mellanox (MLNX -0.3%) could be at risk here - and telecom equipment product lines that combine Broadcom's network processors and switching chips with Avago's optical components.
    • Meanwhile, in its FQ2 report (issued in tandem with the merger announcement), Avago has guided for FQ3 revenue of $1.74B (+/- $25M), above a $1.68B consensus. The company reported a 66% Y/Y increase in FQ2 wireless chip revenue (aided by strong Apple/Samsung demand), along with 74% and 64% increases in wired infrastructure and industrial/other revenue (lifted by both organic growth and M&A).
    | Thu, May 28, 1:34 PM | Comment!
  • Jun. 24, 2014, 10:19 AM
    • Integrity Project, an Israeli firm founded in '06, provides embedded software outsourcing services in areas including hardware development, connectivity, and cryptography.
    • Mellanox (MLNX -0.3%) says it's acquiring Integrity to "enhance [its] software teams" for platforms such as CloudX, which enables the building of cloud infrastructures using commodity server/storage hardware, open-source software (OpenStack-based), and Mellanox's interconnects.
    • Last year, Mellanox bought 100G optical component vendor IPtronics and silicon photonics interconnect provider Kotura, as it tries to meet a looming threat from Intel.
    | Jun. 24, 2014, 10:19 AM | Comment!
  • Jun. 17, 2014, 6:58 PM
    • The consolidation wave that has hit the semi industry could soon yield tax inversion deals for foreign firms similar to deals seen in the healthcare industry, says FBR's Christopher Rolland.
    • Inversion deals allow U.S. companies buying foreign firms to see lower tax rates if less than 80% of the equity in the new company is owned by legacy U.S. shareholders, and the post-merger company has substantial foreign ops.
    • Rolland thinks ARM (ARMH), NXP (NXPI), Mellanox (MLNX), and Taiwan's MediaTek could be among the foreign companies targeted by U.S. chipmakers. Worth noting: Mellanox sells more than just chips, and ARM's business model depends on the company maintaining a neutral status within the industry.
    • Meanwhile, Nomura's Romit Shah names 15 potential M&A candidates, and divides them into 3 groups: "Sub-scale companies" with high margins and strong IP; "strategic companies" with compelling product lines; and "undervalued companies."
    • Shah's "sub-scale companies:" IDTI, ISIL, MTSI, MCRL, SMTC, SLAB.
    • "Strategic companies:" ALTR, AMCC, ATML, CAVM, MPWR, BRCM ($22.5B market cap could make it tough to digest).
    • "Undervalued companies:" DIOD, IRF, MSCC.
    | Jun. 17, 2014, 6:58 PM | 3 Comments
  • Jul. 1, 2013, 9:53 AM
    Mellanox (MLNX +1.7%) strengthens its 100G hand some more by acquiring IPtronics, a Danish maker of components for high-speed optical interconnects, for $47.5M in cash. Mellanox says the deal, which follows its May purchase of silicon photonics interconnect firm Kotura, will help it deliver "end-to-end optical interconnect solutions at [100G] and beyond." Both purchases appear aimed at dealing with the long-term threat posed by Intel (INTC), which (with the help of acquisitions) wants to integrate InfiniBand controllers onto its server CPUs, and bake 100G silicon interconnects into its server platforms.
    | Jul. 1, 2013, 9:53 AM | Comment!
  • May 15, 2013, 5:05 PM
    Mellanox (MLNX) is acquiring Kotura, a developer of silicon photonics interconnect tech, for $82M in cash. The deal, which is expected to be accretive to 2014 EPS by $0.01-$0.03, is noteworthy in light of Intel's (INTC) efforts to both develop both InfiniBand solutions and 100G silicon photonics interconnects for its server CPU platforms, with the goal of creating more modular server architectures. This purchase seems aimed at trying to meet that long-term threat.
    | May 15, 2013, 5:05 PM | 2 Comments
  • Sep. 11, 2012, 11:46 AM
    Mellanox (MLNX +3.0%) has been approached several times by potential acquirers, claims CEO Eyal Waldman, but the company prefers to remain independent. Waldman adds Mellanox has a "gentleman's agreement" with #1 customer Oracle (ORCL) that the latter won't add to its 10% stake, whose value has increased considerably, and claims Mellanox's InfiniBand solutions won't see serious competition from rivals such as Intel for at least 3 years. Others are more concerned. (CFO retirement).
    | Sep. 11, 2012, 11:46 AM | Comment!
  • Jan. 23, 2012, 9:37 AM
    QLogic (QLGC -0.1%) is selling its InfiniBand adapter card and switch business to Intel (INTC) for $125M in cash. The move allows QLogic to focus on its core Fibre Channel and FCoE storage networking businesses, and is the latest in a series of moves made by Intel to bolster its networking offerings (previously). InfiniBand chipmaker Mellanox (MLNX -5.4%) is selling off on the news.
    | Jan. 23, 2012, 9:37 AM | Comment!
Company Description
Mellanox Technologies Ltd designs, manufactures and sells interconnect products and solutions that facilitate data transmission between servers, storage systems and communications infrastructure equipment and other embedded systems.