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EZchip Semiconductor Ltd. Message Board

  • nusaiba nusaiba Sep 13, 2013 12:51 PM Flag

    Breaking News!EZchip Semiconductor just got upgraded to Outperform &raised its PT to $39.

    Feltl & Co's Jeffrey Schreiner, who reiterates a Strong Buy rating and a $39 price target, writing that in past Cisco has unveiled custom silicon to much fanfare, and that it hasn't hurt Ezchip's business with the company:

    Cisco did not disclose the products or end markets it would target with the nPower X1. Due to the Cisco press release EZCH shares plummeted more than 20% this morning on heavy volume as investors worried that Cisco's new NPU would replace EZCH. We believe this announcement is similar to Cisco's announced internal processor called “QuantumFlow.” Cisco announced QuantumFlow in 2008, after initially beginning its relationship with EZCH in 2007. Many investors believed Cisco's QuatumFlow would replace EZCH's solution in future generation routers. To date, the QuantumFlow processor has been used in products not served by EZCH while CSCO continued to use EZCH for its routing platforms. EZCH believes the NP-5 design wins remain intact and has not seen any “backing away” from sample orders at CSCO like was reported to have occurred in customer Huawei as they moved towards internal solutions for low-end routers. EZCH has been shipping samples to CSCO for a few months now, and EZCH continues to ship NP-5 product to CSCO everyday per management. According to EZCH the company is currently working much more on NPS design wins, with implementation of NP-5 into systems currently on-going. We believe EZCH's NPS offers much higher levels of throughput from a single chip than nPower X1, and will also serve layers 2-7 vs. only layers 2-4 offfered by nPower X1. We don't believe CSCO's nPower X1 can offer comparable performance to EZCH's NPS for future designs. EZCH does admit it did not know the announcement was coming, but reiterates that CSCO builds many internal chips, many of which are never announced. We believe today's reaction in EZCH has been a “shoot first ask questions later” mentality. Internal design-out is the largest risk for EZCH and CSCO is the company's largest customer accounting fo ~40% of revenues. We understand investors' initial concerns but we believe with NP-5 designs secure, growth prospects likely remain intact thru CY16.


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