Cabling Issues Not Only Problem at Mellanox (MLNX)

January 3, 2013 11:58 AM EST
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Price: $43.90 --0%

Rating Summary:
    21 Buy, 5 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 15 | Down: 17 | New: 10
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Yesterday Mellanox Technologies (NASDAQ: MLNX) announced that its fourth quarter revenue is projected to be in the range of $119 million to $121 million, below the company's previous guidance of $145 million to $150 million, and the consensus of $148.26 million. The shortfall is primarily the result of a weaker demand environment, challenging macroeconomic conditions, and a technical issue associated with FDR 56Gb/s InfiniBand cabling which caused approximately $20 million of FDR deployments to be delayed.

Commenting on developments, analyst at UBS said "Although cabling was the major problem, weaker demand reduced the top line as well. Management told us one large OEM was below expectations by $5-10mn, likely either HP (NYSE: HPQ) or IBM (NYSE: IBM), each of which was almost 20% of revenue in Q3/12."

With the cabling problem fixed, UBS maintained a Neutral rating on Mellanox Technologies (NASDAQ: MLNX) but cut its price target to $56.00 (from $70.00).

For an analyst ratings summary and ratings history on Mellanox Technologies click here. For more ratings news on Mellanox Technologies click here.

Shares of Mellanox Technologies closed at $61.19 yesterday.

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