All: any opinions on GALTF? I'd like opinions on whether TXN is
in direct competition with GALTF or just "similar" markets? If TXN
is not competing with GALTF, who is?
From recent press releases, company descriptions for Galileo and TI:
Galileo:
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Galileo Technology, a market leader in complex data communications systems on silicon, is one of the semiconductor industry's fastest growing suppliers of complex, high-performance, integrated circuit devices. Galileo's products include single-chip Ethernet switches, high-performance system controllers for RISC processors, and WAN coprocessors. Galileo's products form the heart of many advanced data communications systems built by leading OEMs, such as Bay Networks, Cisco Systems, D-Link, and Hewlett Packard. Galileo employs more than 130 people worldwide with business headquarters in San Jose, California and R&D headquarters in Moshav Manof, Israel. For more information on Galileo, call 1-888-GALTEK-1 or visit our website at galileot.com. >>>>
Texas Instruments:
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Texas Instruments Incorporated is a global semiconductor company and the world's leading designer and supplier of digital signal processing solutions, the engines driving the digitization of electronics. Headquartered in Dallas, Texas, the company's businesses also include materials and controls, educational and productivity solutions and digital imaging. The company has manufacturing or sales operations in more than 25 countries.>>>
Company stats show their differences in size and markets:
ti.com
TI has $9.8 billion in revenues and employees 44,000 world-wide.
Galileo is a niche player with well-respected products in the Ethernet switch market. I saw them present at a tech conference this spring [BARS, I think] and was favorably impressed. Their stock has been under pressure, most likely in tandem with the entire chip industry.
Their 6-K, filed in November 1997, reads:
Galileo was incorporated in November 1992 and commenced operations on March 1, 1993 to define, develop and market advanced digital semiconductor devices. From 1994 to the third quarter of 1995, the Company derived revenues solely from a technology development contract, sales of a line of semiconductor devices that is no longer being sold by the Company and sales of evaluatiion boards. The Company introduced its first system controller in the third quarter of 1994, its first switched Ethernet LAN controller in the first quarter of 1996, and its first remote access WAN controller in the second quarter of 1997. In 1996, nearly half of the Company's product revenues were derived from sales of system controllers and nearly half from sales of switched Ethernet LAN controllers. The Company's switched Ethernet LAN controllers have trown to represent approximately 75% of product revenue for the nine months ending September 30, 1997. The Company anticipates that the switched Ethernet LAN controllers will continue to represent a larger percentage of product revenue over the next twelve months. The Company does not anticipate significant product revenues from sales of its new remote access WAN controller in 1997. . . .
Further in the document, it lists competitors:
". . . . The Company's switched Ethernet LAN controllers compete with products from companies such as Texas Instruments, MMC Networks, I-Cube Deisgn Systems and PMC-Sierra. . ."
If you want the full document, email your fax number and I'll send it.
Investors Business Daily articles mentioning Galileo:
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Is Israel now a satellite branch of Silicon Valley? The country is fast becoming a hub for technology companies specializing in telecommunications, software, chips and health care, analysts say.
So far, 90 Israeli technology companies are listed on U.S. stock exchanges. Israel trails only the U.S. and Canada in that regard. And much of the fuel for growth in the nation is coming from the U.S.
''This is definitely one of the hottest areas in technology right now,'' said Lior Bregman, managing director of CIBC/Oppenheimer Corp., a New York-based investment bank.
Within the last two years, several technology giants, including Intel Corp., Bay Networks Inc., Applied Materials Inc., America Online Inc., Microsoft Corp., Medtronic Inc. and 3Com Corp.'s U.S. Robotics division, either have purchased or bought interest in Israeli technology companies.
Also, U.S. venture funds and public investors have poured nearly $3 billion into Israeli technology companies since the early '90s, analysts say. The number of start-up companies in Israel now stands at about 1,000 a year.
''It's very similar to what you find here in Silicon Valley. Some people call Israel the next Silicon Valley,'' said Oded Rose, general partner for the Walden Group, a San Francisco-based venture capital company.
Analysts say Israel's technology wave is a product of several converging factors. The region has a burgeoning technical work force, thanks in part to Israel's military, scientists who immigrated from Russia, and U.S. corporations - including Intel, Motorola Inc. and IBM Corp. - that have hired and trained workers.
The Israeli government also has taken the lead in building the region's technology base. Over the last three years, it has poured $200 million in local venture funds, provided $100 million in grants and loans to Israeli companies and offered tax breaks for companies to move into so-called enterprise zones.
Further, interest in Israel was heightened by two local success stories: Galileo Technology Ltd. and Check Point Software Technologies Ltd.
Galileo, a maker of chips for network systems, reported a profit of $10.3 million and sales of $36.5 million in '97, compared with a loss of $900,000 and sales of $6.5 million in '96.
Israel's most talked about success story is Check Point, the first company to produce firewall software for Internet security. Since its inception in '93, Check Point has signed partnerships with several companies to push its product. It raised $58 million in an initial public offering in June '96.
The company produced a profit of $40.2 million and revenue of $82.9 million last year, compared with a profit of $15.2 million and revenue of $31.8 million in '96. Check Point has a $1.7 billion market cap.
Such numbers make Eli Barkat smile. Six years ago, Barkat's company, BRM Ltd., an Israeli investment fund, bought a 50% interest in Check Point for $500,000. Since then, BRM has invested $10 million in Israeli technology companies.
''Israel has a lot of talent,'' Barkat said.
Weiss, Peck & Greer Venture Partners LP, a Menlo Park, Calif.-based venture capital fund, is another believer. It began investing in Israel's technology community five years ago and was the only U.S. fund to invest in Galileo. So far, the company has invested $35 million in Israel, says general partner Gill Cogan.
''With an increasing amount of competition with venture capital funds for U.S. companies, it makes sense for us to look at other areas for investing,'' Cogan said.
It's not just start-ups that are gaining attention. Intel set up a chip design center in Israel in the early '70s and now is working on building its second chip plant, set for completion next year.
Intel has 2,700 workers in Israel now. It expects to hire 1,500 more employees and 1,500 contractors to staff its new plant, says Intel spokesman Robert Manetta.
Other tech titans are not finding the going easy. Microsoft faces scrutiny from Israel's Antitrust Authority, which is examining whether to declare the software giant a monopoly. If it is determined that Microsoft has more than 50% of the market, then it will face stricter oversight in Israel.
And Israel does have its drawbacks for companies planning to invest, say observers. First there is the inherent political strife and instability in the region. And distance is an issue.
''The distance is a critical thing,'' said Weiss, Peck & Greer's Cogan. ''You don't just hop on a plane and fly 17 hours on a moment's notice.''
BRM's Barkat says some venture funds have been reluctant to invest in Israel because the government requires some companies to pay royalties to the government.
But many Israeli companies are trying to get around those problems by opening offices in the U.S. Israel's track record makes it look like a pretty safe bet, Barkat says.
''It's probably more dangerous to bet on (companies in) Chicago than Tel Aviv,'' he said. [4/08/98]
>>>>
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This year will be a highflier for chips that help push data around a network.
Networking chips will post more sales growth in '98 than in any of the next three years, says San Jose, Calif., market researcher Dataquest Inc.
Evolving networking technology is adding fuel to a market that already has been growing steadily. New networks that send both voice and data will boost the need for new chips. So will the fact that these chips are handling more of the work once done by software.
The result is a hot market. ''(Networking chips are) growing faster than the rest of the chip market,'' said Greg Sheppard, a Dataquest analyst. ''It's definitely a good place to be.''
The networking chip market is surging at about 20% annually, compared with 16% for the overall chip market, he says.
The $26.4 billion networking equipment industry is desperate for any speed advantage. Networking firms are turning to the $138 billion chip industry to boost bogged-down networks.
''The trend that is taking place in corporate intranets and the Internet is taking over the (chip and networking) marketplace,'' said Gary Smerdon, networking product marketing director for Sunnyvale, Calif.-based Advanced Micro Devices Inc.
That's good news for chipmakers that need a steady source of income while they struggle in other areas. AMD, for example, still is trying to make headway against leader Intel Corp. in the market for microprocessors, the brains of a PC.
In '96, the top players in the $2.2 billion worldwide local-area-network chip market were: National Semiconductor Corp. with 20% of the sales, AMD with 16.5%, Lucent Technologies Inc. with 14.9%, LSI Logic Corp. with 11% and Texas Instruments Inc. with 6.9%.
The rankings have remained steady the past few years. But Texas Instruments is newly aggressive, says Diane Myers, an analyst with market researcher In-Stat Inc. of Scottsdale, Ariz. She says Texas Instruments is making strides to grab market share.
Even small firms can carve out their spots in networking chips.
For example, Fremont, Calif.- based Seeq Technology Inc. is building its business on Fast Ethernet chips. Fast Ethernet could comprise 55% of Seeq revenue in its fiscal year ending in September, says CEO Phil Salsbury. That's up from 30% of its $31.3 million in fiscal sales last year.
Networking chip firms like Seeq and San Jose, Calif.-based Galileo Technology Ltd. hope to capitalize on new technology trends.
First Ethernet exploded in the late '80s and became the most common networking technology. Fast Ethernet, which is 10 times speedier than Ethernet, hit the market in '94. Now it's Gigabit Ethernet that's expected to give chipmakers another push. It's 10 times quicker than Fast Ethernet.
There are about 120 million PC-to-network connections, or ports, today, says Salsbury. He says about one-third are Fast Ethernet, compared with about one in eight of the 80 million ports in '96. And there should be about 3 million Gigabit Ethernet connections this year, Salsbury estimates, from virtually none last year.
Also, data-networking companies are working fast to converge voice and data onto one network. These new networks will require new chips, AMD's Smerdon says.
Smarter silicon is another reason chipmakers are seeing their networking business boom. Where once a microprocessor and software handled most networking duties, that capability now is built into silicon.
So chips have become more complex. And chipmakers must become intimately familiar with the inner workings of networks.
''It's no longer throwing jelly beans over the wall,'' Dataquest's Sheppard said. ''You have to have chips honed to the networks.''
That's an advantage to established chipmakers because such complexity keeps out nominal players, says Galileo President Manuel Alba. He notes that many networking chips are more complex than Intel Pentium microprocessors.
Chipmakers want to make networking chips even more complex. The more sophisticated and desirable a chip becomes, the higher the profit margin, analysts say. The next step is ''system on a chip,'' which builds technology from several chips into one.
National Semiconductor has targeted system on a chip as a prime moneymaker. This intense customization could be the next wave in networking, says Don Macleod, chief financial officer for Santa Clara, Calif.-based National Semiconductor.
National Semiconductor is talking with the major networking firms to create systems on a chip for their gear, Macleod says. This chip could cut networking companies' costs and speed product development, he says.
''Our goal is to have significant (system on a chip) revenue in '99 coming out of networking and personal systems,'' Macleod said. >>>>[2/12/98]
>>>>
Makers of computer networking gear are slashing prices in a key product, hoping to gain market share by selling more to smaller businesses.
The product is an Ethernet switch. The device - a mix of hardware and software - adds lanes to a network to speed data transmission.
Starting Sept. 30, firms have cut Ethernet switch prices by as much as half. Falling prices for the chips in the products spurred the cuts. Lower costs and increasing volume will more than offset the price cuts, say networking firms.
Unlike price wars involving PCs, disk drives and other products, none of the switch makers are selling their product at a loss. As a result, analysts don't call this a full- scale price war.
Still, the firms say prices likely will continue to slide in the next several months. And one player could break out with ultra-low prices, forcing others to follow, analysts say.
''I think it will continue to heat up,'' said Dwayne Shirakura, an analyst at market research firm The Dell'Oro Group in Portola Valley, Calif.
The second-quarter ranking in the market for switching hubs - a big piece of the switch market - mirrors that of networking in general. The leader is San Jose, Calif.-based Cisco Systems Inc. It's followed by 3Com Corp. and Bay Networks Inc., both based in Santa Clara, Calif., and Rochester, N.H.'s Cabletron Systems Inc.
Customers shouldn't wait for another round of cuts. Ethernet switches are a good deal now, says Don Miller. Formerly an analyst with San Jose, Calif., market researcher Dataquest Inc., he joined Bay earlier this month as director of strategic competitive research.
On Sept. 30, Cisco halved its low-end Cisco Catalyst 1900 switch to $74 per port, or per connection, to a network. On Oct. 2, Bay Networks cut prices by 20% for two switches. Its BayStack 303 fell to $76 and the BayStack 304 12+1 to $107.
On Oct. 27, Cabletron halved the price of its SmartStack 10 switch to about $75 per port.
3Com is holding at $99 a port and has no immediate plans to cut the price, says Tim Jalland, the firm's director of product marketing.
Firms will sell $6.87 billion of networking switches - mostly Ethernet switches - this year, up by almost two-thirds from $4.23 billion in '96, says Dataquest. The researcher predicts sales of $11.1 billion in 2000.
The switching hub market alone was worth $1.38 billion in the second quarter, Dataquest says.
The switch market is so young and fast-growing that leadership positions can change quickly, says Miller. Bay and 3Com are taking share away from Cisco in switching, he says.
3Com began targeting the switch market 18 months ago. It's not surprised that its rivals dropped prices, Jalland says. ''It was already built into our models and plans,'' he said.
Bay, which has lagged its top competitors, hopes to gain share in the overall networking market by advancing in the switch segment.
''They're aiming at 3Com,'' Dell'Oro's Shirakura said.
Actually, the firm's aiming at everyone, says David House, Bay's chief executive.
''Bay is fully re-engaging in the marketplace,'' House said. ''We're seeing (customers) come from 3Com, Cisco and Cabletron. I don't think we're targeting any particular competitor.''
Bay will pass on its silicon savings to customers, lowering prices accordingly, House vows.
Cisco, though, views 3Com as its biggest threat.
''Ethernet switching is a two-horse race,'' said Larry Birenbaum, vice president and general manager of Cisco's small internetworks business unit. ''(Ethernet switches) are the new mainstream. It's taken over the Ethernet hub market.''
Hubs resemble switches, but are an older method of shuttling data on a network. Like an airport hub, a network hub directs incoming and outgoing data onto the best path. Switches and switch hubs, by contrast, create more paths and thus are faster.
Cabletron, for example, once made all its money in hubs. Switches now comprise 25% of its sales, says Trent Waterhouse, a Cabletron senior program manager.
If switch prices are low enough, companies will forgo hubs for switches. ''This enables the customers to implement switched access to the desktop . . . as opposed to the shared hub technology,'' Waterhouse said.
The cheaper prices open new avenues to small and midsized firms, where price is a top concern. A network's ''last mile to the desktop is all about price,'' said Esmerelda Silva, an analyst at International Data Corp., a Framingham, Mass.-based market researcher.
Cisco began targeting small business in this market a mere six months ago. The new prices are part of that strategy, Birenbaum says. ''The declines will not be as dramatic, but they will continue,'' he said.
Networking companies can cut prices largely because they can buy or make the chips used in switches for less. Prices for such chips have fallen more than a third this fall, to about $32 per port, says chipmaker Galileo Technology Inc. in San Jose.
>>>> [11/11/97]
Looking at current price action, I notice GALTF dropped with all the semis beginning with Kurlak's downgrade on May 15. If you click "Quotes" here on SI, there's a place you can do comparison charting. Click "charts" and program in any semiconductor companies you want and you'll discover they've all been trending down.
If I were considering buying this stock, I'd want to know what they have that no one else has and how difficult it is to copy, what their contract with Cisco entails, and if they can market it to other customers. The 6-K reads, "The Company is contractually prohibited form marketing certain of the features of its switched Ethernet LAN controllers designed for one of its significant customers to other potential customers."
On a more positive note, Galileo recently added three new managers, all of them either directly or indirectly from Intel:
galileot.com
Okay, that's it for today.
Later --
Pat
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