Wednesday, May 27, 2015

Seeking Alpha: As Mellanox Scales Up, So Do The Challenges

As picks go, I can't really complain about how Mellanox (NASDAQ:MLNX) has been doing. Up about 45% from when I last wrote about the stock, Mellanox has been executing well on the Intel (NASDAQ:INTC) Grantley-driven high-performance computing cycle, but also doing well integrating itself deeper into markets like high-end storage and cloud/Web 2.0. Mellanox has also continued to broaden its horizons, improving the software capabilities of its Ethernet switch products, introducing additional interconnects, and pushing the frontier on its Infiniband interconnects.

Are there threats? Of course. While QLogic (NASDAQ:QLGC) and Avago's (NASDAQ:AVGO) Emulex may not be threats at the high end, Intel and Broadcom (NASDAQ:BRCM) most certainly are. I believe that Mellanox can continue to find success by pushing the outer limits of available performance, but that runs the risk of limiting the company to specialty/high-end applications. I continue to believe that Mellanox can deliver long-term annualized growth of around 10% and generate significant free cash flow growth, but that potential is not nearly so undervalued as it was about a year ago.

Continue here:
As Mellanox Scales Up, So Do The Challenges

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