27 Dec

What’s Next for Mellanox?

WRITTEN BY Ruchi Gupta

Mellanox becomes takeover target

The future of Mellanox Technologies (MLNX) has become a big subject of speculation in recent months. In October, CNBC reported that Mellanox had hired advisors to explore a potential sale after receiving takeover interest from more than one company. In November, CNBC named Xilinx (XLNX) one of the companies exploring the acquisition of Mellanox. On December 19, a report from the Times of Israel named Microsoft (MSFT) as another company interested in acquiring Mellanox. Neither of these companies has confirmed or denied takeover maneuvers.

What’s Next for Mellanox?

Revenue soared 24% at Mellanox

Mellanox is a maker of products used in data centers. It reported its third-quarter earnings in October, delivering what executives called the fifth consecutive quarter of record results. Its revenue rose 24% YoY to $279.2 million in the third quarter and profit rose to $37.1 million from $3.4 million a year earlier. The company guided fourth-quarter revenue in the band of $280 million to $290 million. Since the company reported revenue of $237.6 million in the fourth quarter of 2017, its projections for the fourth quarter of 2018 show it is expecting top-line growth of as much as 22%.

Demand for data center products

Mellanox is benefiting from data center construction as cloud computing companies work to expand their capacity to meet growing demand for their services.

Nutanix (NTNX) and Arista Networks (ANET), the other suppliers of data center products, reported revenue growth of 13.7% and 28.7% YoY, respectively, in their most recent quarters.

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