Mellanox to Buy Integrity Project - Analyst Blog


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Mellanox Technologies ( MLNX ) recently agreed to acquire privately-held Integrity Project. The transaction is expected to close in the third quarter of 2014. However, the financial details of the deal were not revealed.

Founded in 2006, Integrity Project is an elite team of highly-skilled software engineers. The company specializes in connectivity, real-time applications, low-level development, and security. Besides the Defense Ministry, some of the other customers of the company include Texas Instruments ( TXN ), Motorola, HTC and others.

Mellanox has been putting its InfiniBand architecture to use in developing the next generation of networking equipment called CloudX. Integration of the aforesaid with the existing networks will require enormous knowledge of network protocols.  

This is where Integrity Project's experienced personnel will come into play. It is expected that they will help Mellanox in developing software which could enable cloud data centers to run applications more rapidly and efficiently.

The acquired solutions will also enable its customers to achieve optimal performance from all interconnect components, thereby driving customer base and growth of the company, going forward.

We believe that the acquisition will not only help Mellanox to deliver end-to-end optical interconnect solutions but also position it well against competitors including the likes of Intel ( INTC ) and Cisco ( CSCO ).

Mellanox reported dismal fourth-quarter results and also provided a tepid guidance. However, we believe that Mellanox's product offerings such as InfiniBand products and Ethernet solutions will drive top-line growth, going forward. Moreover, its association with multiple partners in the ecosystem is likely to add to its cloud solutions and customer base.

However, sluggish macroeconomic growth and customer concentration are major headwinds going forward.

Currently, Mellanox has a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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