This week too will be a crowded one for company financials, with leading semiconductor companies reporting, companies that are chiefly dependent on the telephones sector. Broadcom (BRCM) and Ceva Inc. (Nasdaq:CEVA); LSE:CVA), both of which I hold in my portfolio, report tomorrow, while sector leader Qualcomm (QCOM) reports on Wednesday. Broadcom has already announced that it will meet its fourth quarter guidance, which is no wonder, since Apple (AAPL) is a large customer. Analysts are a little concerned about the guidance for the quarter to March, because Apple will experience a seasonal downturn, while for Broadcom’s problematic customer Nokia (NOK) there is still no light at the end of the tunnel.
A fourth semiconductor company in this field, Marvell Technology Group (Nasdaq: MRVL), issued a profit warning on Friday, before the opening, for the quarter that ends tomorrow. The reaction of the share price shows how tough life is for the short sellers these days. In the first two weeks of January, after hints from Marvell’s management at the Las Vegas show that its market was suffering from the floods in Thailand and from seasonal weakness in China, the short level jumped to 54%. On Friday, despite the warning, the share closed unchanged, and even rose slightly during the session, because the short players were crushed when they tried to buy the share back.
AudioCodes and Radware won’t disappoint
In telecommunications equipment, two companies I hold will report on Wednesday, AudioCodes Ltd. (Nasdaq: AUDC; TASE: AUDC) and Radware Ltd. (Nasdaq: RDWR). I believe that the warning from AudioCodes in the third quarter was not a sign of long-term weakness in VoIP, because it is well known that thousands of enterprises around the world are gradually transferring to VoIP networks with interfaces for their employees’ smartphones. AudioCodes has OEM agreements some big companies: among other things it is a main hardware supplier for Microsoft’s software solutions, and its Skype division is due to undergo a substantial upgrade this year.
As far as Radware is concerned, in my view it will not disappoint on Wednesday, either in its results or in its guidance, as happened to two leading companies in the field last week, Juniper (JNPR) and Riverbed (RVBD), with the latter collapsing 18% on Friday on disappointing guidance. Eighteen months ago, Riverbed, which is active in the adjacent field of optimization, and currently has a market cap of $3.8 billion, was mentioned as one of the companies interested in buying Radware at a valuation approaching $1 billion.
If, as I believe, 2012 is going to be a third successive year of strong growth for Radware, in sales and profit, it is likely that at some stage this year it will again receive acquisition offers on the basis of its superb load management and security technologies, in the new era of cloud computing and coping with overloaded networks.
Published by Globes [online], Israel business news - www.globes-online.com - on January 30, 2012
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