IBM launches first-ever start-up accelerator
Eyal Waldman: We think that Mellanox should stay independent so long as it can continue to grow faster than it could as a unit of a buyer.
Rumors have revived in the capital market that an IT giant, either IBM Corporation (NYSE: IBM) or Oracle Corporation (Nasdaq: ORCL), is offering to acquire Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) at $150 a share, or $6 billion, a 61% premium on yesterday's closing price. However, given the company's expected strong growth, it is no wonder that the market has responded with skepticism to the rumors.
At an analysts conference in Tel Aviv today, Mellanox chairman, president and CEO Eyal Waldman had this to say: "We think that Mellanox should stay independent so long as it can continue to grow faster than it could as a unit of a buyer. Look what happened to VMware, which was sold to EMC for $600 million in 2004. What was a great deal at the time, is now worth almost $40 billion. A sale blocks future potential value."
EMC Corporation (NYSE: EMC) floated VMware Inc. (NYSE: VMW) in 2007, and still owns 80% of the company.
It is hard to argue with Waldman, especially after the 50% jump in Mellanox's share price last week, after it predicted $155 million in third quarter sales, an amount far above analysts' forecasts. "We think that the current share price is low," he added.
Over the past week, Mellanox, a provider of high-speed Infiniband connectivity solutions for enterprise computer networks, has been trying to explain to a skeptical capital market why its guidance is real; in other words, why it will be able to maintain this rate in the future. "What is happening is what we always said," says Waldman: Mellanox's contemporary growth engines are Web 2.0 companies, and social networks, such as Facebook Inc. (Nasdaq: FB) and Google Inc. (Nasdaq: GOOG), where each project can reach tens of millions of dollars. He also sees strong growth possibilities in the storage systems market.
"What mainly disturbs my sleep about the future is our performance," says Waldman, commenting on future opportunities after the current total addressable market (TAM) of $6 billion. "We can fall on anything we do at the company. Our technology is strong, and, most of all, it is what we know, but I also believe that we are leaders in sales and marketing," he says.
As for Mellanox's cash reserves, Waldman says, "The purpose of our $320 million in cash reserves is for acquisitions, even though we don’t need this to grow. We don’t invest much effort in looking for acquisitions. You have no idea how many offers we receive from bankers who constantly surround us."
Mellanox's share price rose 3.2% to NIS 388 by mid-afternoon on the TASE, after rising 3.2% on Nasdaq yesterday to $93.45, giving a market cap of $3.8 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on July 26, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
You comment was recieved and soon will be published.
Thank you for posting your comment, which will be reviewed for publication.
Load more comments
Alpha Zone in Petah Tikva will focus on big data, cloud computing and more.
Cyber security co Sentinel Labs raises $12m
It is the only company offering protection on Windows, Mac OSX and Android.
Microsoft chooses WEB3 as local digital media partner
WEB3’s clients include Cellcom, Tnuva, El Al, and Strauss.
Kaltura aims to be world's biggest video technology co
CEO Ron Yekutiel: The idea is to combine Wikipedia with YouTube.
Marvell Technology firing 200 in Israel
The company is firing 15% of its 1,300 employees in the country.
Amazon, Google, Microsoft battle to host developers
The Internet giants want to attract developers to build apps on their cloud-computing infrastructures.
Amdocs CEO: We strive for 5% annual growth
Eli Gelman fears complacency as the company expands in emerging markets.
Intel Israel development center to remain vital
Intel Israel president Mooly Eden tells "Globes" that Israel remains central to the chip company's plans.
SuperCom share price skyrockets 920%
SuperCom CEO Arie Trabelsi tells "Globes" how he has turned around the identity solutions company.
IMI enters cyber security arena
As privatization approaches, Israel Military Industries bets on a market with enormous growth potential.
Wanted: Arts majors for high-tech
Technology companies are looking for creativity, flexibility, and the ability to think outside the box.
2013 boom year for Israeli high-tech
In the first half of the year, there was a 52% rise in demand for mobile and web developers, and salaries are up as well.
CyberArk reboots network security
CEO Udi Mokady: Media reports on electronic surveillance make explaining our product unnecessary.
Architect Eli Attia: Google stole my life's work
Eli Attia has developed an innovative building design and construction concept that Google sees generating $120 billion annually.