Jim,
1 ) “ ...why should the focus be "after the vote”…”
Perhaps this is too flip as EZ is a significant part of my portfolio, but I don’t think a no vote would be anything worse than what we’ve experienced, multiple times, with a vague CSCO press announcement. I don’t think it will retreat to 14 and volatility has been a part of being a long term EZ investor.
With a no vote, would Eyal eventually sweeten the bid, or explore partnerships with EZ to market together ? Would another suitor come in now that EZ was clear of the MLNX agreement ? I would hope Eli’s 700k shares (skin in the game besides founding the company and what that may mean) would motivate him to do the right thing, including stepping out of the CEO position if that is what his “heart” says. The only new information we’ve heard is that some of the competitive risks are changing, not the sky is falling. Hopefully over time the stock will recover and then some. They still have some amazing technologies.
2) “... If the No vote carries again in January, then earnings estimates for MNLX will drop because the EZCH acquisition is accretive to MLNX earnings....”
I’m not clear on this but would agree with you that it is not priced in at this point. Not sure how they can, particularly if there remains some question about the acquisition price (wishful thinking on my part), and on timing of the closing.
A related question not yet discussed is are there any significant PR consequences for Mellanox depending on how things proceed from this point ?
One initial reaction is that if Eyal walks with a no vote, I’d look at him as a fierce negotiator who would put getting the very best deal and winning, likely along with his ego, above what may be doing the right thing for his company. Perhaps "business naive" on my part. but not sure I would want to do business with him if I had a choice.
And yes, EZ would have it’s own PR issues to deal with. |
