Mellanox Technologies, Ltd. (MLNX) surprised investors with a relatively in-line performance compared to its guidance after a negative preannouncement in early January, says Andrew Nowinski, Assistant Vice President & Research Analyst at Piper Jaffray & Co.
“Management stated that an inventory overhang at one of their large OEMs forced them to guide the March quarter well below expectations as that OEM burns through their existing inventory,” Nowinski said. He also adds that the stock, along with the data storage sector in general, is volatile, having gone from $33 all the way to $120 last year, and now trading around in the $50s.
Nowinski says that, although Mellanox may not deliver results like it did in the past, results assumed for this year are achievable, especially if factoring in deals that may realize in 2013.
“Now, I am not suggesting that Mellanox will again deliver 8% growth in 2013, and in fact we are actually modeling for just $450 million in revenue, which equates to about a 10% decline. However, I do think the sequential growth rates we are assuming for Q2 to Q4 are achievable, and moreover, those assumptions are not factoring in any large deals that may come in throughout the year,” Nowinski said.
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