Jim,
If the no vote carries, I agree that it is likely that EZCH stock will decline in the short-term, though I think it would be a buying opportunity. As I have posted before, speculation that another suitor will emerge should keep the stock from dropping too much. Frankly, EZCH has been so volatile over the years that a short-term drop just doesn't concern me.
Furthermore, over the next 12 months, the stock price will react to quarterly earnings/outlooks as well as news. The February CC should be just two or three weeks after the January vote. Looking further ahead, by the end of the year the NPS-400 is scheduled to enter production and the Tilera-MX 100 is scheduled to start sampling. This is the first time ever that EZCH has two new product families launching so closely together, and given the hopes for SDN/NFV, white boxes, and others, I am cautiously optimistic that EZCH will remain independent or at least acquired at a much higher price.
Regardless of short-term movements, I expect EZCH's SP to exceed $25.50 by the end of 2016, and to be substantially higher by the end of 2018. When I decide to sell, it will be my decision and not driven by an opportunistic bid (I don't blame MLNX for trying to serve its shareholders well).
I also agree that both MLNX and EZCH will have to pick up the PR pieces since both companies have been hurt. EZCH is more obvious because of the factors discussed previously, but ultimately the staff at EZCH is extremely talented and I believe that they will carry the day. Weren't there ~30 commercial NPU companies 15 years ago and the only one left today is EZCH? To operate at that level, I have to believe EZCH engineers are intrinsically motivated by achievement and can tune out this business noise.
As for MLNX, I don't have access to detailed analyst reports but would be surprised if they have not already modeled the EZCH business into their 2016 estimates. (MLNX and the media keep repeating this accretive deal is a done deal from Day 1, which is somewhat amusing. I haven't seen any articles that even suggest the second vote could be No even though it is the second try.)
If the second vote is No then I believe that MLNX will drop in price, as any company would if its forecasted earnings fell short and an important strategic initiative (broadening its R&D base) were to fail. Plus, the outcome would be plain embarrassing. But MLNX like EZCH will recover too.
We'll see in just two weeks! GLTA. |
