Extreme Networks (EXTR): Small Acquisition Should Contribute to Earnings in 2H17 - Needham
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Needham & Company Buy Extreme Networks (NASDAQ: EXTR) price target of $4.75 (from $4.30) after the company bought Zebra’s wireless business. The transaction should close in CY4Q and based on the change-over from sell-in to sell-out accounting in the channel, it will likely show up in revenues for half of CY4Q.
Zebra was losing money in this business but EXTR is not taking all of the overhead and other costs. EXTR expects the unit to be solidly profitable as configured under the deal metrics. GMs are expected to be in the 45-48% range, at least initially. Wireless now accounts for 30% of revenues and should help drive higher growth rates.
Shares of Extreme Networks closed at $4.23 yesterday.
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