Mellanox could attract a buyout

Article Excerpt

MELLANOX TECHNOLOGIES LTD. $78 (Nasdaq symbol MLNX; Manufacturing & Industry sector; Shares outstanding: 52.2 million; Market cap: $4.1 billion; No dividends paid; Takeover Target Rating: Medium; www.mellanox.com) makes products that connect computer servers and storage devices for the efficient processing of data. Those products include Spectrum switches, ConnectX-5 network cards and the LinkX family of cables. Each is suited to the ever-increasing data speeds required for artificial intelligence applications. Activist investor Starboard Value owns 10% of Mellanox. It wants the firm to cut its research and other costs as well as consider finding a buyer for the entire company. So far, Mellanox has resisted that pressure. Meanwhile, for the most recent quarter, revenue rose 7.2%, to $237.6 million from $221.7 million a year earlier. Excluding one-time items, earnings rose 3.9%, to $42.9 million from $41.3 million. Earnings per share of $0.82 were flat as a result of more shares outstanding. Mellanox’s outlook is positive, and its diversified, leading-edge products could make it an acquisition target. Mellanox…