Anyone have the transcript of the recent ( perhaps today's ) earnings call? Evidently, the CEO said they were informed by a large Chinese customer that the customer was going to make the produce in-house in future ( possibly STEALING EZCH's designs ). CSCO probably won't buy from the Chinese if they sell to others but there are some that might have no such compunctions (especially if it hurts an Israeli company ).
Anyone know the name of the Chinese company (Hui... or something )? If it does steal ( as is likely ), does it have enough of an American presence to be sued?
EzChip can compensate for Huawei setback, Globes columnist says
Israel's EzChip (EZCH) may have been engaging in a negotiating tactic when it said during a conference call that its customer Huawei may decide to develop its own processors, rather than buy those of EzChip, Israeli stock analyst Shlomi Cohen quoted analyst Paul McWilliams of Next Inning as writing. EZchip was trying to tell Huawei that it is ready to stop dealing with Huawei if the Chinese company doesn't pay a fair price, McWilliams believes, according to Cohen. The Israeli analyst views McWilliams' idea as "fantastic," and adds that if he is right, EzChip's tactics are very strange. Cohen, however, expects EZchip's sales to Cisco (CSCO) to more than make up for its potential loss of Huawei's business
When you actually look at the transcript my concern, based on a press report of its content, was 'way overblown. There isn't the slightest indication that Huawei is going to get into the "merchant" semi business let alone copy EZ's designs. That was a speculation based on a speculation. It is unrealistic to believe that Israelis wouldn't anticipate copying, competition, etc. Juniper did go in-house as should be expected. EZ's "edge" is keeping ahead of the state-of-the-art. How long it can continue to do that is problematical but plausible for the foreseeable future.
That makes the sell-off, presumably based on the conference call ( since coeval with it ) overdone and a buying opportunity until the initial panic and shakeout dissipate.