New Pick: Nasdaq MLIN - $4.00 (Micro Linear Technologies)
Detailed Description:
Micro Linear Corporation supplies integrated circuits for a number of applications in the communications market. These products are used by customers to create solutions to high-speed networks supporting broadband digital voice, data or video transmission, in the enterprise, small office/home office (SOHO) and home markets. The Company sells its products to original equipment manufacturers (OEMs) of data communication, telecommunication, industrial and consumer products.
At the beginning of 2000, the Company sold a broad line of analog and mixed-signal integrated circuits into a number of different market segments. The products included power management, video filters, data acquisition, bus interface, wired networking and wireless transceivers. Fabrication of all devices was outsourced to many different foundries worldwide. Testing of all semiconductor wafers was completed by Micro Linear in San Jose prior to devices being assembled off shore, and then returned to Micro Linear in San Jose for final test of the assembled devices. All products were proprietary and each individual product line competed with a number of larger companies for high-volume, low-cost applications.
During 2000, the Company reorganized its product development organization. The Company's small design center in Livingston, Scotland, was closed, and wireless RF transceiver design for the consumer market segment was consolidated in the Company's Cambridge, England, design center. Additionally, in order to expand product development capabilities beyond RF transceiver design to include complete silicon solutions and the required embedded support software, the Company opened and staffed a new design center in Salt Lake City, to focus on the development of wireless network system architecture and baseband processor design. In September 2000, the Company sold its power management, bus interface and video product lines, to Fairchild Semiconductor Corporation (Fairchild), for $11 million in cash. The Company's ongoing product lines consist of its wired networking and wireless products.
High-Speed Data Networking
Local Area Networks (LAN) are typically configured between large computers, servers, desktop personal computers, switches, repeaters and routers, with all nodes communicating using the Ethernet networking protocol. Ethernet standards exist for 10Mbps, 100Mbps and 1000Mbps transmission rates, and for twisted pair copper, coaxial and fiber media. A different technology and integrated circuit, called a Physical Interface (PHY), is required for each standard and each media. The PHY detects and conditions low-level, high-speed signals from the transmission media for subsequent processing by a computing or communications system. For lower system cost, PHYs are also available that autonegotiate to detect either 10Mbps or 100Mbps transmissions interspersed on the same media, eliminating the need for dedicated media for each transmission speed. 1000Mbps Ethernet technology is now available and networks are initially being deployed between large computers and switches in network backbones.
The Company supplies PHYs for wired or fiber-based high-speed networks, including transceivers and media access controllers. These devices support 10Mbps Ethernet twisted pair copper 10BASE-T or fiber 10BASE-FL, and 100Mbps Fast Ethernet for twisted pair copper 100BASE-TX or fiber 10BASE-FX, as well as 100BASE-SX standards. Proprietary circuits are also supplied for signal conversion between 10Mbps 10BASE-T twisted pair copper media and 10BASE-FL fiber media, as well as 100Mbps 100BASE-TX twisted pair copper media and both 100BASE-FX and 100BASE-SX fiber media.
Wireless Networks
The wireless market segments the Company currently participates in include Local Area Networks, consumer and industrial. In January 2000, Micro Linear introduced its first two RF transceiver chip sets. The first chip set is targeted at wireless local area networks and supports the IEEE802.11 standard, delivering 2Mbps data rates sufficient for low-cost networks transmitting data between multiple personal computers and other peripherals within the home. Many applications are satisfied with this network solution.
During 2000, the Company expanded its core competency in wireless technology for local area networks by investing in development of a total system architecture, 5GHz radio design, new and additional modulation/demodulation technology, digital baseband processor architecture and design, and embedded software development. The Company also made investments in software and tools to support advanced silicon design methodologies targeted at reducing time to market and improving the likelihood of first silicon success.
MY TAKE
MLIN has to offer a lot for networking gear makers with its chip level solutions (chipsets & ASICS). They offer legacy Ethernet silicon plus a number of integrated solutions geared towards the wireless industry, they recently made significant inroads into supplying the digital handset market. Their most recent CC highlighted a number of design wins - totally 7. Revenues should almost double in the current quarter from the last one...
But what is the real aim in MLIN is not wireless handsets but the upcoming WIRELESS ETHERNET segment. A 40Mbit/second product in the unlicensed spectrum should be finalized by end of the year. And MLIN is one of the few smaller niche players pursuing this highly disruptive area. They are a fabless company and their 40Mbit/second PHY implementation will use SiGE (SIlicon Germanium)
Marketcap around $50m, Shares are trading around $4 up from a low of $2 and down from a 52 week high of $5. Company has managed to trim losses significantly. Breakeven is expected end of this year. Institutionals have been net buyers of 500k shares recently. Book Value $2.70, Cash per share $2.31. Firm is almost debt free. Price/Sales is around 1.85, P/BK .. 1.40
Not without risk but worth definitely has a chance to suceed in becoming a major player in wireless Ethernet..
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