Boston, MA 10/07/2014 – EZchip Semiconductor Ltd. (NASDAQ:EZCH)’s was the subject of Wall Street’s wrath early in the week, after CEO, Eli Fruchter, reported that the company’s third quarter revenue will fall short of earlier projections. The announcement comes in the wake of the Israeli-based company announcing it was grappling with declining orders as well as inventory adjustments from key customers.
Slow Down in Carrier Spending
EZchip Semiconductor Ltd. (NASDAQ:EZCH) attributes the sluggish orders to a slowdown in carrier spending environment although the company expects the same to change in the long-run. The positive from the conference call was that the company was enjoying substantial growth in its NPS business, which continues to expand to new markets mostly in data centers. A revision of the company’s third quarter estimates did not go well with analyst at Wall Street as the company slumped with the highest margins for the year of 10.35%.
EZchip Semiconductor Ltd. (NASDAQ:EZCH) now expects to post sales of $19 million for the third quarter ending Sept 30, falling short by 14% of the $22 million that was expected. Despite experiencing slow growth in the second quarter, EZchip Semiconductor Ltd. (NASDAQ:EZCH) is expected to report sales growth of 15% for the entire year. Acquisitions continue to dictate the growth pace of the company with the company bullish on closing in on a deal for Tilera in the fourth quarter.
EZchip Acquiring Tilera
The company last released its earnings in August where total revenue came in at $22.10 million slightly above consensus estimates of $22.04 million.
The acquisition of Tilera is expected to diversify EZchip Semiconductor Ltd. (NASDAQ:EZCH) market segments, as well as customer reach providing the much-needed growth opportunities. Gary Mobley an analyst at Benchmark Co LLC. Rates the company as a ‘Buy’ with belief that the company will continue to maintain a strong competitive advantage especially in the network processor business
EZchip Semiconductor Ltd. (NASDAQ:EZCH) average rating by research firms stands at a Buy from 9 research firms with four sticking with a‘hold’ rating.
