Mon, Aug. 17, 2:14 PM
- In a weekend column, Bloomberg notes the use of home-grown switches by Web/cloud giants such as Facebook, Google, and Amazon spells an opportunity for network processor (NPU) vendors such as EZchip (NASDAQ:EZCH), and could help the company offset an expected decline in Cisco revenue due to Cisco's decision to use its own ASICs in next-gen edge router line cards.
- EZchip, of course, isn't alone in going after the opportunity: Broadcom, Marvell, Intel, and Cavium are among the firms currently present in the data center NPU market. EZchip, which historically has depended on NPU sales for carrier equipment, is targeting data centers both via its NPS-400 processors (will begin sampling in Q4, recorded 5 tier-1 design wins in Q2), and via its Tilera unit's TILE-Mx family (supports up to 100 64-bit ARM cores, begins sampling in 2H16).
- Shares are up 29% since EZchip delivered a Q2 beat and in-line guidance last Wednesday. Brean upgraded on Thursday.
Thu, Aug. 13, 11:23 AM
- Brean has upgraded EZchip (NASDAQ:EZCH) to Buy a day after the company post a Q2 beat and issued in-line Q3 guidance. Chardan Capital has hiked its target by $5 to $20. Shares are now up 18% over the last two days.
- Meanwhile, Cisco (CSCO - expected to make up ~35% of EZchip 2015 revenue) reported yesterday afternoon its router sales rose 3% Y/Y in the July quarter. On the earnings call (transcript), CEO Chuck Robbins noted high-end carrier router sales were strong, and that Cisco needs to "probably improve our performance in our edge routing platforms."
- EZchip's processors go into line cards for Cisco's ASR 9000 edge router line, but Cisco plans to use proprietary ASICs in next-gen edge router line cards. During EZchip's earnings call (transcript), CEO Eli Fruchter stated ~25% of EZchip's revenue is tied to the ASR 9000, and 10% to other Cisco products. "[W]e believe prior investor expectations for 35% to 40% of our revenues to be at risk due to the decision by Cisco for next generation line cards in its ASR9K platform, may be overstated."
Wed, Aug. 12, 11:00 AM
- In addition to beating Q2 estimates, EZchip (NASDAQ:EZCH) has guided on its earnings call for Q3 revenue of $30M-$31M, in-line with a $30.5M consensus. Many other chipmakers with strong telecom/networking exposure have issued below-consensus guidance (I, II).
- Though (as previously announced) Cisco doesn't plan to use EZchip's NPS-400 network processor (NPU) in next-gen edge router line cards, the company is expected to account for ~35% of EZchip's 2015 revenue. The NPS-400 is set to begin sampling in Q4; 5 NPS-400 design wins were scored in Q2 with tier-1 OEMs.
- CEO Eli Fruchter: "To the best of our knowledge, there is no NPU-based roadmap within other merchant silicon vendors. This could position EZchip to become the only high-end merchant NPU vendor in the market able to satisfy the growing demand from both traditional networking vendors as well as from new white box customers."
- Gross margin was 76.7%, up from 74% in Q1 and down from 80.9% a year ago. $4.7M was spent on buybacks. EZchip ended Q2 with $189M in cash (equal to 33% of its current market cap), and no debt.
- Q2 results, PR
Thu, Jul. 23, 2:56 PM
- Application delivery controller/security hardware vendor F5 (FFIV +6.9%) beat FQ3 estimates on the back of strong software sales, and provided above-consensus FQ4 EPS guidance (revenue was in-line). With growing 100G long-haul optical deployments serving as a tailwind, optical networking hardware vendor Infinera (INFN +9.6%) beat Q2 estimates and provided strong Q3 guidance.
- Also: Optical component vendor Alliance Fiber (AFOP +16%) beat estimates and offered healthy guidance. Strong datacom component demand from cloud service providers was cited.
- A slew of telecom/networking equipment, component, and chip vendors are higher on a day the Nasdaq is down 0.4%. The list includes Infinera rival Ciena (CIEN +1.6%), F5 rival Radware (RDWR +3.3%), and Alliance Fiber peer NeoPhotonics (NPTN +4.7%). Others include Ciena acquisition target Cyan (CYNI +1.8%) and chipmakers Cavium (CAVM +3.6%), PMC-Sierra (PMCS +3%), EZchip (EZCH +2.8%), and InPhi (IPHI +3.7%).
- Broader gains for chip stocks - the Philadelphia Semi Index is up 1.7% after selling off hard yesterday - are likely helping the chipmakers. Cisco, meanwhile, is up 2.2% after striking a deal to sell its share-losing set-top unit to Technicolor.
- During F5's earnings call, new CEO Manny Rivelo stated F5 now leads the virtual (software-based) ADC market, which has sometimes been seen as a major long-term threat to its ADC hardware business, and noted the company saw a 20% Y/Y increase in its deferred revenue balance (driven by services/subscription growth) to $743M. He also disclosed sales chief Dave Feringa is stepping down on Oct. 1; his successor will be named shortly.
- On Infinera's call, CEO Tom Fallon mentioned the company has now invoiced 12 customers for its new Cloud Xpress data center interconnect platform, up from 7 three months ago. For now, long-haul optical still makes up over 90% of revenue - Cloud Xpress growth, the pending launch of a metro aggregation product, and (provided it's approved) the Transmode acquisition should change that. 3 customers accounted for over 10% of Q2 revenue.
Tue, Jun. 16, 11:53 AM
- ZTE plans to use EZchip's (NASDAQ:EZCH) NPS-400 network processor in its next-gen carrier router line cards. The NPS-400, which succeeds the current-gen NP-5, delivers up to 480Gbps of throughput (twice the NP-5's), and is set to begin sampling in 2H15.
- ZTE accounted for 8% of EZchip's Q1 sales, trailing only Cisco's 35%. EZchip tumbled last month after using its Q1 report to announce Cisco is expected to use an proprietary ASIC in its next-gen edge router line cards in lieu of the NPS-400. The company is still hoping to sell Cisco on the NPS-1000, a future processor expected to provide 1Tbps of throughput.
Wed, May 13, 12:07 PM
- EZchip (NASDAQ:EZCH) has guided on its Q1 CC (prepared remarks - .pdf) for Q2 revenue of $27.5M-$28.5, in-line with a $28.3M consensus. Gross margin is expected to be around 75% - it was at 74% in Q1, down from 81.7% a year ago thanks to the Tilera acquisition.
- The company also tried hard to argue it can offset Cisco's decision not to use EZchip's NPS-400 NPU in its next-gen edge router line cards with various NPS-400 design wins from carriers, networking hardware vendors, and (Internet) data center owners. Tilera's TILE-Mx processors (support up to 100 ARM cores, aimed at data centers) were also cited as a future growth driver.
- Cisco accounted for 35% of EZchip's Q1 revenue, and ZTE 8%; Cisco sales are expected to grow in 2015 as NP-5 shipments ramp. The NPS processor line is expected to start producing revenue "as early as 2016," and the TILE-Mx line in 2017.
- Shares remain down sharply, but have slightly pared their premarket losses.
Wed, May 13, 9:26 AM
- EZchip (NASDAQ:EZCH) uses its Q1 report to state its largest customer (i.e. Cisco) doesn't currently plan to use EZchip's NPS-400 network processor (NPU) in its next-gen edge router line cards.
- The company adds Cisco (NASDAQ:CSCO) recently began using EZchip's NP-5 NPU (entered production in late 2014), that it doesn't think "a next generation successor for the NP-5 is likely to ship for approximately three years," and that the NP-5 is expected to "continue generating revenues at this customer for several more years beyond this three year period."
- Concerns that Cisco could drop EZchip in favor of an in-house NPU have been around since the networking giant unveiled its nPower X1 NPU in Sep. 2013. At the time, EZchip said it believes Cisco hasn't made a decision on which processor will succeed the NP-5.
- Today, EZchip says it believes Cisco's next-gen edge router line cards will require more throughput than is provided by the NPS-400 (480 Gbps), and that Cisco is "currently developing such a solution in-house." EZchip, for its part, is working on an NPS-400 successor (the 1Tbps NPS-1000) that it hopes to sell Cisco on. The NPS-400 begins sampling in 2H15, and is being considered for other platforms at Cisco (as well as other clients).
- EZchip has tumbled to $14.28 in premarket trading.
- Q1 results, PR
Wed, May 13, 9:15 AM
Thu, Jan. 29, 2:32 PM
- MoSys (MOSY -6.4%) is having a rough time ahead of tomorrow morning's Q4 report. Shares are 20% below where they traded before the networking SRAM maker posted a Q3 miss and reported seeing a design win slowdown on Nov. 4.
- This week has seen MoSys announce a partnership with network processor vendor EZchip (EZCH +1%) through which the former will provide a version of its Bandwidth Engine 3 SRAM IC optimized for the latter's NPS processors (set to sample this year, aimed at carrier Ethernet switches/routers and data center hardware).
- Also: MoSys has been showing off its SRAM and transceiver (PHY) ICs this week at the chip industry's DesignCon conference (runs from Jan. 27-30).
Dec. 22, 2014, 2:33 PM
- EZchip (EZCH +6.4%) declares its 200-gig NP-5 network processor "is now in full production," and is being "delivered in quantity to EZchip's customers for deployment in Tier-1 carrier and data-center networks."
- The NP-5 offers twice the throughput of the prior-gen NP-4, and carries an ASP that's 50% higher. EZchip asserts the extra horsepower will enable line cards with "multiple 40-Gigabit and 100-Gigabit ports."
- The company mentioned on its Q3 CC it's seeing "a lot of activity with ZTE" related to the NP-5, and that top customer Cisco plans to migrate its existing NP-4-based (edge router) platforms to the NP-5. However, EZchip would only say Cisco, which unveiled its nPower X1 processor last year, will "possibly" use the NP-5 in new platforms.
- EZchip's NPS processor line - it can handle deeper packet analysis, and is aimed at both carrier Ethernet and data center hardware - is expected to begin sampling next year.
Dec. 9, 2014, 1:52 PM
- Verizon CFO Fran Shammo has promised his company will continue growing wireless capex (albeit while cutting wireline capex) to keep up with data traffic growth. Small cells and smart antennas were mentioned as areas of interest.
- The remarks have been well-received by investors in telecom equipment and component/chip vendors, many of whom have been hit hard by soft North American and (to an extent) European spending. The Nasdaq is up 0.3%.
- Gainers: JDSU +3.6%. FNSR +3.1%. CYNI +10.1%. INFN +2.8%. CIEN +1.9%. AMCC +3.7%. PMCS +3.7%. ZHNE +3%. OCLR +5.4%. AFOP +2.8%. ADTN +2.5%. UBNT +2.2%. XXIA +1.7%. CALX +3.5%. EZCH +2.9%. SONS +2.4%. Sonus is also benefiting from a bullish Wedbush coverage launch.
- The group was pummeled in November after AT&T set a 2015 capex budget of $18B, down from 2014's $21B.
Nov. 26, 2014, 2:52 PM
- Chip stocks are outperforming after Analog Devices (ADI +5.2%) beat FQ4 estimates and offered in-line FQ1 guidance. The Philadelphia Semi Index (SOXX +1.9%) has made new highs.
- Notable gainers include many analog/mixed-signal and telecom IC firms: TXN +3%. LLTC +2.7%. SMTC +3.1%. ISIL +3.3%. SWKS +3.7%. AVGO +2.9%. OVTI +3.2%. FSL +3.1%. EZCH +2.5%. XLNX +2.3%. ALTR +2.1%. MX +4.3%. PMCS +2.7%. BRCM +2%.
- On its CC (transcript), ADI noted its telecom equipment chip sales are holding up well in spite of weak capex, aided by the fact its dollar content for 4G base stations is "at least 20% to 30% better" than for 3G base stations. The company also mentioned its lead times were stable in FQ4.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Nov. 12, 2014, 11:45 AM
- With weak carrier spending continuing to take a toll, EZchip (NASDAQ:EZCH) guided on its Q3 CC (webcast) for Q4 revenue of $22M-$24M, below a $25.3M consensus. The guidance includes nearly two quarters of revenue from Tilera; EZchip doesn't plan to separately break out Tilera's revenue going forward.
- Sales to top customer Cisco (43% of Q3 revenue) fell Q/Q, as the networking giant (reports after the bell) contends with soft carrier orders. Nonetheless, EZchip expects its full-year Cisco sales to be up Y/Y.
- EZchip expects Cisco to use its next-gen NP-5 processor for its existing edge router platforms, and says it could possibly do so for new platforms. Shares plunged a year ago after Cisco unveiled its nPower X1 processor.
- ZTE sales (8% of revenue) fell sharply Q/Q. EZchip expects sales to bounce as ZTE begins using the NP-5. Juniper sales (7% of revenue) are expected to continue declining. Revenue from all other customers (42% of revenue) rose 87% Y/Y, and reached a new record.
- The first design win has been obtained for EZchip's NPS processor line (features more programmability). EZchip claims strong NPS interest from both equipment vendors and data center owners.
- EZchip issued a Q3 warning back on Oct. 6.
Oct. 27, 2014, 11:46 AM
- Citing the implications of Juniper's Q4 guidance and industry commentary, Chardan Capital's Jay Srivasta has downgraded EZchip (EZCH -2.8%) to Neutral ahead of its Nov. 12 Q3 report, and cut his target by $8 to $22.
- Srivasta notes Juniper stated U.S. carrier spending remains weak, and that demand from enterprises and European carriers is also softening. Juniper also said its "planning assumption" is for growth to resume in 2H15.
- Though admitting Juniper only accounts for 6% of EZchip's revenue, Srivasta thinks Cisco (39% of revenue) and ZTE (20%) could be dealing with similar issues, something that puts EZchip's Q4 consensus estimates at risk.
- Cisco's service provider orders were down 11% Y/Y in the July quarter. Sales of its ASR 9000 edge routers (feature EZchip's network processors) still rose at a double-digit clip.
Oct. 6, 2014, 11:30 AM
- EZchip (EZCH -12.5%), a top supplier of network processors for edge/access routers, now expects Q3 revenue of $19M, below prior guidance of $22M and a $22.6M consensus.
- CEO Eli Fruchter: "We have seen weakness in orders as well as inventory adjustments across most of our key customers that are serving the carrier networking equipment space. We believe this is a temporary slowdown, caused primarily by a weaker carrier spending environment that the market is currently going through." Like others, he's optimistic growth will soon pick up.
- Fruchter's remarks echo those from Cisco (EZchip's top customer), Juniper, Ciena, Finisar, JDS Uniphase, and several other firms. Soft North American wireline capex (led by AT&T) has especially been taking a toll on the industry.
- Several telecom equipment and component/chip suppliers are following EZchip lower. CIEN -2.8%. CAVM -2.8%. OCLR -2.7%. ZHNE -2.7%. CYNI -3.1%. AFOP -2.1%. NPTN -2.4%. OPLK -1.7%.
Aug. 28, 2014, 11:33 AM
- EZchip (NASDAQ:EZCH) has soared over the last 30 minutes of trading. Volume is already over 2x the daily average.
- A rumor that the network processor vendor has cancelled a Roth conference presentation (set for Sep. 3) could be playing a role. Shares have rallied on M&A hopes in the past - a long list of chipmakers have been acquired over the last 9 months.
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