Mellanox Technologies, Ltd. Message Board

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Technology Stocks : Mellanox Technologies, Ltd.

MLNX 124.89

0.0%

Apr 27 5:00 PM EST

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EzStinger

JCnieuwenj

To: w0z who wrote (413)	7/29/2016 10:44:04 AM
From: PaulAquino	2 Recommendations of 954

Kerryb - Comment on "Mellanox: Ethernet And EDR To Drive Double-Digit Returns" Below is a good writeup fro Barclays after meeting with the company and I think they are being very conservative on Ethernet growth. Mellanox thinks the spectrum switch could be a 10% revenue for them next year and if the leave at a 10 mil run rate in Q4 it is possible they could get over 80 mil in 2017. MLNX also thinks it could eventually capture over 10% of an 8 billion TAM. They have a lot of technological advantages over the Broadcom switches that they have been showing and they are adding the EZChip NPS to the spectrum by the end of this year/early 2017 and Broadcom does not have a chip competitive with the NPS. The 25/50/100G upgrade cycle will go on for years and will be 8-10 times larger than 40G which has provided the majority of the MLNX Ethernet revenue where they have a 90% share. The EZ estimates also seem low with only a 9% increase. That's only about 10mil. The NP5 just started its ramp this year and could add the 10 mil alone. The NPS will also be in production. One Arista design win alone should be over 10 mil a year and they have more tier one wins. An analyst I know says channel checks show the NPS is doing better than expected with design wins. MLNX said in the conference call that customers are seeing in nfv that using the NPUs is much cheaper than using intel. Radisys has shown a 10X improvement over intel with the flowengine and is talking about double digit wins for the upcoming flowengine with the NPS. Mellanox is adding 25/50G and more software to the NPS. I also think storage with Bluefield and other Mellanox efforts will be big winners for them in Ethernet. The LinkX cables are also growing nicely. They will also likely do other products using EZ multicore and NPUs. The big threat is omnipath and Barclays has a lot of that below. I also read reports from Credit Suisse and Summit Redstone that say omnipath is way overblown and both do not see more than 10% share for it. The stock price will be impacted until Mellanox proves that infiniband is growing again and show more traction with the new Ethernet revenue. If infiniband goes back to double digit growth like Mellanox has claimed in recent tech conferences along with Ethernet growth then the stock will do very well. If Omnipath turns out to be a bigger threat then that will lead to headwinds. (The Barclay's report which Kerry refers to in his SA comment was courtesy of Mr. Cohen's post, " Buy the Omni-Path Overhang"; # 408; July 25th). Excellent contributions from both, and very much appreciated !

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