Mellanox Technologies Ltd.
) reported fourth-quarter 2013 loss of 5 cents per share, in line
with the Zacks Consensus Estimate. The loss includes stock based
compensation but excludes other one-time items.
Revenues plunged 13.6% from the year-ago quarter to $105.5
million and were short of the Zacks Consensus Estimate of $108.0
million. FDR 56Gb/s InfiniBand revenues contributed 55.0% of
revenues while Ethernet products contributed 15.0%.
During the quarter,
) contributed 15.0% and 11.0% of revenues, respectively.
Non-GAAP gross profit was down 15.4% from the year-ago quarter to
$72.3 million, primarily due to lower revenue base. Gross margin
for the quarter stood at 68.5% compared with 70.0% in the
year-ago quarter. Including stock-based compensation, gross
profit came in at $71.9 million.
Non-GAAP operating expenses increased 28.3% year over year to
$63.2 million. As a percentage of revenues, operating expenses
increased from 40.4% in the year-ago quarter to 49.9%. Including
stock-based compensation, operating expenses came at $52.0
Non-GAAP operating profit for the quarter was $9.1 million, down
from $36.2 million in the year-ago quarter, primarily due to
higher operating expenses. Operating margin was down from 29.6%
in the year-ago quarter to 8.62%. Including stock-based
compensation, Mellanox reported operating loss of $2.6 million.
Non-GAAP net income was $9.7 million, down from $30.7 million in
the year-ago quarter.
Mellanox exited the quarter with $330.2 million in cash and
investments versus $306.4 million in the previous quarter. During
the quarter, accounts receivable decreased $3.3 million to $70.6
million. Cash flow from operations was $30.7 million compared
with $16.4 million cash used in operations in the previous
For the first quarter of 2014, revenues are projected in the
range of $100.0 million to $105.0 million and gross margin in the
range of 67.5% to 68.5%. Operating expenses are expected to
increase 2.0% to 4.0% on a sequential basis. Non-GAAP diluted
share count for the quarter is expected to be in the range of
46.0 million to 46.5 million shares.
Mellanox reported dismal fourth-quarter results. However, we
believe that Mellanox's product offerings such as InfiniBand
products and Ethernet solutions will help the company to drive
top-line growth. Moreover, its association with multiple partners
in the ecosystem is likely to create a more significant value-add
to cloud solutions and consumers going forward.
However, sluggish macroeconomic environment, and increasing
competition from its peers such as
) may act as headwinds, going forward.
Currently, Mellanox has a Zacks Rank #4 (Sell).
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