Time is not of the friend of EZ at this stage. Longer this drags the more its engineers are at risk of leaving and customers delaying implementation.
I couldn't disagree more that EZ is better off returning to independence now. You have a lame duck CEO who is not leaving and no change in corporate governance at the board level. There's no question EZ and MLNX are a stronger combined company than separate. It's clear why MLNX didn't use stock, it's dilutive. The recent move by MLNX was pretty savvy. You can be pissed at them all you want but why overpay if you don't have to. And there is no one calling. IMO, its still a ten bagger as a NewCo, at least. Partially the same comparison but UNPH merged to JDSU and recall where that went...pre-crash.
I also disagree that customers are not looking at alternatives, design wins or not. With all the research on the huge future of SDN and the IOT, why would any networking company bank its future on a supplier that you don't know where they will be? CSCO or any networking company could buy EZ with a blink of an eye, so why would JNPR or the other 4 buy one NPS right now and build around it when it could be pulled? This issue doesn't go away if they go back and be independent. EZ is forever in play should MLNX just throw in the towel and walk. The only thing Eli has been dead right on forever is the internal competition from its customers. These chips are that important for survival. Put yourself on the board of CSCO and ask the question. You never, ever make yourself dependent on a sole supplier of a key technology.
The only reason this deal isn't done right now is the 75% rule. And why hasn't another suitor stepped up? The match ability is clearly one but in tech, $1B is nothing, so if the EZ portfolio is so valuable, CSCO and many others could out bid MLNX with little trouble. EZ has been presented to buyers for years. Investment bankers present ideas to their clients regularly, unsolicited. To think EZ has somehow flown below the radar for the last 15 years is naive. There is $2 trillion of M&A buying capacity right now in the US. There's not enough assets to deploy the capital.
Of course I would have wanted more. $30/share probably would have done it for most here. You should be mad at Eli, he's mismanage the IR/PR of EZ forever but I'm not convinced he's done anything illegal and you would have a real hard time proving it. There are a lot of advisors here. EZ is damaged goods in the investor community, has been for years, we've all known it. Let's face it, its always betting on the come with EZ, plenty of head fakes. Just wait for the NP-4, not much waiting for NP-5...NP-5, just starting. NPS, game changing technology - still too early for sales. Tile-MX, going to kill it. It was going to take hockey stick growth to change the perception, it has never happened. There are a lot of other tech companies in this space that have done very well the last 15 years. EZ is not one, the IRR on EZ in the last 15 years is about 2%. Of course if you timed the market right at $40 then congrats.
Need to take the emotion out and step back. EZ has changed forever, and its not for the good if they go it alone. You ask what does Mgt know that we don't. It's the above, but most here know it too. |
