Oct. 14, 2014, 6:07 PM
- Intel's (NASDAQ:INTC) Data Center Group saw broad-based strength in Q3, CEO Brian Krzanich noted on the CC. Enterprise sales rose 11%, networking 16%, HPC 22% (good for MLNX), and cloud 34%.
- He added Intel's new Grantley Xeon CPUs are seeing strong uptake, and that the chip giant now has 35 custom Xeon SKUs for various clients. Facebook, eBay, Microsoft, and other Web giants have been avid buyers of custom Intel server CPUs.
- 15M tablet CPUs were shipped in Q3; Intel still expects 40M in 2014. The company promises a "substantial improvement" in mobile chip profitability next year as contra revenue payments drop, but doesn't expect the segment to turn profitable.
- Aside from a stabilizing market, Intel thinks PC division sales benefited from share gains (no doubt against AMD) and higher inventories (they were depressed a year ago). A couple of analysts pressed Intel on inventories; the company insists customers have an "appropriate amount." A mix shift towards Bay Trail Atom CPUs pressured ASPs.
- On CNBC (video), CFO Stacy Smith noted developed markets are still faring better than emerging markets, and argued Microchip (responsible for the warning heard round the chip world) "[plays] in different segments." Linear Technology, which has more customer overlap with Microchip, just missed estimates and issued light guidance.
- INTC +2.7% AH. AMD +1.2%. MU +1.8%.
- Q3 results, details.
Sep. 30, 2014, 9:13 AM
- Believing the company is "well-positioned to capitalize" on a server upgrade cycle fueled by Intel's Grantley Xeon CPUs (launched earlier in September), Piper's Andrew Nowinski has upgraded Mellanox (NASDAQ:MLNX) to Overweight, and hiked his target by $10 to $50.
- Nowinski sees Grantley boosting Mellanox's sales and earnings growth for the next 4-6 quarters. He also points out shares have fallen 11% since July 2013 (when Piper downgraded them), while the Nasdaq is up 25%.
- Mellanox's management has already forecast Grantley will boost the company's HPC-related sales (roughly half of its revenue).
Aug. 27, 2014, 7:21 PM
- IDC estimates global server sales rose 2.5% Y/Y in Q2 to $12.6B. That marks a turnaround from the 2.2% drop seen in Q1, and the 4.4% drop seen in Q4. Gartner estimates sales grew 2.8%.
- IDC declares the server market, hurt in recent quarters by system consolidation and a shift in demand towards the white-label gear beloved by Web giants (referred to by IDC as ODM Direct), is seeing "the beginning of a cyclical refresh cycle." It sees the pending launch of Intel's (NASDAQ:INTC) Grantley Xeon CPUs, along with Microsoft's plans to end Windows Server 2003 support, lifting sales into 2015.
- Sales of x86 servers (mostly Intel-based) rose 7.8% in Q2, and now make up 78% of industry revenue. Non-x86 server sales fell 12.8%.
- Market leader H-P's (NYSE:HPQ) share rose 40 bps Y/Y to 25.4%, with x86 growth offsetting Itanium weakness. #2 IBM's share fell 340 bps to 23.6% ahead of the sale of its x86 server ops to Lenovo; on the bright side, IBM's decline narrowed from Q1's 600 bps.
- #3 Dell's share fell 160 bps to 16.2%. #4 Oracle's (NYSE:ORCL) grew 10 bps to 5.9%, with engineered system growth offsetting declines for older UNIX/SPARC server lines. #5 Cisco (NASDAQ:CSCO), which recently proclaimed its UCS server ops are on a $3B/year run rate, saw its share rise 140 bps to 5.8% on the back of 35% growth. Cisco should pass Oracle in a quarter or two.
- ODM Direct vendors saw their share grow 110 bps to 6.6%. The shares of all other vendors rose 190 bps to 16.1%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Aug. 4, 2014, 9:41 AM
- Barclays has upgraded InfiniBand switch/adapter market leader Mellanox (MLNX +2.5%) to Equal Weight, and downgraded Fibre Channel switch/adapter leaders QLogic (QLGC -1.3%) and Emulex (ELX -6.3%) - the former to Equal Weight, and the latter to Underweight.
- All three companies also have a presence in the data center Ethernet switch/adapter space. Barclays is optimistic about Mellanox's improving business trends, and worried about the impact of a declining Fibre Channel market on QLogic and Emulex.
- Mellanox rallied 10 days ago after providing strong Q3 guidance to go with in-line Q2 results, and providing upbeat commentary on demand from both HPC and non-HPC markets. QLogic plunged after guiding for a Q/Q gross margin drop (caused by a mix shift towards Ethernet products) to go with an in-line revenue forecast. Emulex reports on Thursday.
Jul. 25, 2014, 12:45 PM
Jul. 25, 2014, 9:53 AM
- Though Q2 revenue was only in-line, Mellanox (NASDAQ:MLNX) guided on its CC (transcript) for Q3 revenue of $114M-$118M, largely above a $114.4M consensus.
- CEO Eyal Waldman states Mellanox expects 2H14 growth from both its core HPC market (still half of revenue), and from storage and Web/cloud use cases. Design wins for EMC's new VMAX3 high-end storage systems - they use a 56-gig Mellanox InfiniBand interconnect - will help with storage growth.
- As expected, Mellanox expects the 2H launch of Intel's Grantley Xeon CPU to boost HPC-related demand; other Intel efforts still pose a long-term threat, but Mellanox doesn't expect an impact before 2016. It's also upbeat about the launch of 100-gig InfiniBand switches and adapter cards.
- IBM was the only 10%+ customer in Q2, accounting for 11% of revenue. 56-gig InfiniBand products made up 50% of revenue, 40-gig InfiniBand 15% of revenue, and Ethernet 19% of revenue. Mellanox is counting on the Integrity Project acquisition to strengthen its position in an Ethernet market where its share is still limited.
Jul. 25, 2014, 9:13 AM
Jul. 24, 2014, 4:15 PM
Jul. 23, 2014, 5:35 PM
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Jul. 22, 2014, 12:36 PM
- Re/code states IBM's SoftLayer cloud infrastructure/Web hosting unit is adding support for InfiniBand server interconnects. Mellanox (MLNX +2.4%), which supplies InfiniBand switches and adapter cards to IBM's server unit, has caught a bid in response.
- A SoftLayer exec notes InfiniBand, used by 222 of the world's 500 most powerful supercomputers, could appeal to clients who need to move huge data volumes at high speeds - for example, ones running analytics software or processing large amounts of scientific data. "Were seeing a lot of interest in moving more complex workloads to our cloud, and our customers want more powerful infrastructure."
- With few cloud infrastructure providers currently supporting InfiniBand, IBM's move could spark broader adoption. The news comes ahead of Mellanox's Thursday Q2 report.
Jul. 18, 2014, 4:02 AM
- Israeli soldiers and tanks have entered Gaza after 10 days of bombardments from the air failed to stop the rocket attacks from the Strip and cease-fire efforts collapsed.
- The campaign is aimed at "destroying the terror tunnels dug from the Gaza Strip into Israeli territory," says PM Benjamin Netanyahu. "The goal is restoring quiet to the citizens of Israel for an extended period, with significant damage to the infrastructure of Hamas and other terrorist organizations."
- Shares of Israeli companies listed in the U.S. tumbled to their lowest level in a week, led by Mellanox Technologies (NASDAQ:MLNX) which closed down 3.5%.
- ETFs: EIS, ISRA
Jul. 16, 2014, 9:20 AM
- The 19% Y/Y Q2 sales growth posted by Intel's server CPU reporting group (an improvement from Q1's 11%) is sitting well with Mellanox (NASDAQ:MLNX) investors.
- So are Intel's CC remarks (transcript): The company said its server CPU unit witnessed "a richer product mix and ASP mix" (aided by the recent launch of new high-end Xeon E7 CPUs), that its HPC-related sales grew more than 15%, and that its Grantley server CPU platform (22nm Xeon E5) will launch later in Q3.
- Jefferies has upgraded Mellanox to Buy, and hiked its PT by $13 to $50. The firm expects a strong Grantley launch.
- Mellanox derives roughly half its revenue from HPC clients, and has previously said many HPC buyers are waiting for Grantley to arrive. Its Q2 results are due on July 24.
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. 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.
May 1, 2014, 11:14 AM
- On top of missing FQ3 sales estimates (while hitting EPS forecasts), Emulex (ELX -24.7%) is guiding for FQ4 revenue of $94M-$100M and EPS of $0.00-$0.05, well below a consensus of $115.7M and $0.18.
- Storage adapter card/controller/switch archrival QLogic (QLGC -6.1%), which reports after the close, is off in sympathy, as is storage switch leader Brocade (BRCD -2.4%). Mellanox (MLNX -1.7%), which competes against Emulex in the 10G Ethernet adapter space, is also declining; its shares already tumbled last week due to a Q1 miss and soft guidance.
- On its CC (transcript), Emulex mentioned its network connectivity product sales (71% of revenue, dominated by Fibre Channel storage offerings) fell 9% Y/Y, as Fibre Channel weakness more than offset 10G Ethernet growth. The FC issues are blamed on UNIX server weakness (sales have been in freefall for a while) and "specific issues" with an x86 server OEM (likely IBM).
- Moreover, in remarks with clear implications for QLogic/Brocade, Emulex says it now expects a "higher rate of secular decline in the Fibre Channel business than previously anticipated." Its own FC sales are now expected to fall at a high-single to low-double digit Y/Y clip vs. prior guidance for a mid-single digit drop.
- Also, Emulex's network visibility product sales (Endace, 6% of revenue) came in below expectations, and its legacy storage connectivity/other business (23% of revenue) is expected to fall 10%-15% in FY14 and perhaps over 30% in FY15.
Apr. 25, 2014, 12:47 PM
MLNX vs. ETF Alternatives
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.
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