InfiniBand chips developer
Mellanox Technologies (
recently announced that it has entered into a definitive
agreement to acquire privately-held Kotura for approximately
$82.0 million, subject to certain adjustments. The acquisition is
expected to be completed in the second half of 2013.
Mellanox expects the acquisition to add at least a penny to a
maximum of 3 cents to its fiscal year 2014 earnings per share.
Apart from being accretive to the bottom line, the takeover of
Kotura will enable Mellanox to open its first research &
development ("R&D") center in the United States.
Mellanox announced that it will continue to support Kotura's
existing customers and will also retain its product line.
Kotura's silicon-based photonics chip allows signals to pass
between chips using photon (light) instead of electron. This
makes data communication between chips much faster, an important
criterion for the smooth running of modern scale-out data
Currently, data centers are facing a huge challenge to improve
communication speed between switches and routers in order to
efficiently manage the ongoing data explosion. Data center
administrators are finding it increasingly difficult to speed up
interconnection between switches and routers from 10 gigabyte per
second ("Gbps") to 100 Gbps, primarily due to low deployment of
100 Gbps transceivers.
According to Kotura the bottlenecks behind the usage of 100 Gbps
transceivers are the huge size of the first-generation C Form
Factor Plugs (CFP - a standardized pluggable transceiver that
supports 100Gbps Ethernet), higher consumption of power and
This is where Kotura's silicon photonics technology comes into
play. Currently, Kotura offers a fiber-based transceiver that can
deliver 100 Gbps inside the data center, which can eventually
expand to 400 Gbps to 1.6 terabit per second (Tbps). Moreover,
silicon photonics solutions consume low power compared to 100Gbps
Mellanox believes that the acquisition will boost its competitive
position in the high-speed, scalable and efficient end-to-end
interconnect solutions market for servers and storage systems.
Mellanox will face significant competition from established
International Business Machines (
Nevertheless, we believe that the addition of silicon photonics
solutions to Mellanox's product portfolio will boost its
capability to offer faster and smaller interconnects to next
generation data centers. This will boost customer base and
top-line growth going forward.
Currently, Mellanox has a Zacks Rank #3 (Hold).
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