Written by: Zack Miller | May 21, 2008
An interview with Silicom (SILC) was featured as part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and
the opportunities we cover at www.israelnewsletter.com
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Can you tell us a bit about the history of Silicom (Nasdaq: SILC)?
Avi Eizenman, Founder and Chairman of the Board: When we founded the company in 1987, our original idea for the firm was that we would be a fabless IC company. We were profitable almost from day one and this is something that’s in the fabric of the company. (Continue »)
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Written by: Aaron Katsman | November 23, 2007
Aaron Katsman
www.IsraelNewsletter.com
So here we go again. Just when I had pretty much thrown in the towel on Radvision(RVSN), the video-conferencing over IP and 3G networks company throws me for a loop with news of an insider stock purchase. The stock has gotten absolutely crushed this year down a whopping 40% YTD, due to a string of lower earnings guidance for the last few quarters. While the company enjoys a very close relationship with Cisco(CSCO), I am of the opinion that they have taken that relationship for granted and have lacked the focus and drive necessary to bring in other customers and grow the business.
A few days ago, the company received permission to purchase up to $30 million in stock. Skeptics among us may see that as a PR stunt to boost the stock, but in addition to the news of the company buyback, was the more interestingheadline that Yehuda Zisapel, a former Chairman of the Board of RVSN and the brother of the company’s current Chairman of the Board, bought $2 million of stock.
What to make of all this? On the one hand I can’t stand when companies talk a good game and fail to deliver. On the other hand, when the former Chairman puts in $2 million, I am intrigued. With the stock so far down, it may pay to start getting back in and slowly build a position. Of course as soon as I do, I am sure something else bad will happen, and it will start to drop again!
Please see our Disclaimer HERE.
Disclosure: Author has no position in any other stocks mentioned, as of 11/23/07.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Written by: Zack Miller | October 16, 2007
Zack Miller
IsraelNewsletter.com
Tech Insider site, Unstrung, wrote yesterday that various sources are pointing to Cisco (CSCO) doing an imminent M&A in the WiMAX space and the most likely candidate is Navini Networks. Interesting factoid…
Unstrung’s analysis is based on a ThinkEquity analyst’s piece published on September 28th. In the piece, analyst Anton Wahlman posits two interesting pieces of info:
- Cisco is finally interested in getting serious about WiMAX.
- Navini wins the bake-off and not Alvarion (ALVR)
So, addressing point #1, ThinkEquity’s thesis is that WiFi, something Cisco knows A LOT about with its Linksys acquisition, and WiMAX go together, much like enterprise and public networks (muni and cellular) are all blending together. Cisco, of course, realizes this and its next move would have to be a seminal acquisition of a WiMAX public networks company. Here’s a link to more about CSCO’s WiMAX ambitions.
Point #2 requires some analysis. Why would Cisco choose to go with Navini? Well, a couple of reasons. Navini has “beamforming technology” . See Wikipedia on beamforming here. ThinkEquity believes this is critical for best performance. Navini also has deployed with AT&T (T) in several good markets (FL, LA, and GA). Lastly, Navini has made good progress on the 802.16e standard. So, in essence, ThinkEquity believes that beamforming makes MIMO technology really useful.
If Cisco were to purchase Navini, it would mean bypassing Alvarion. Clearly, the WiMAX opportunity is huge. There are probably 1000 operators who will spend $10M to over $100M each rolling out WiMAX in the next two to four years. ThinkEquity believes this market opportunity is $10B-$100B+.
If Alvarion plays its cards right, building off its best-in-class execution of a WiMAX centric plan with the world’s system-level equipment suppliers, some analysis points to the fact that they could capture 5% or more of market share in this space. Backing that out, that could mean anywhere from $500M - $5B in revenues. Alvarion currently sports a market cap under $800M with a net-cash position of almost $2/share.
Alvarion has the largest installed based of fixed WiMAX deployments (170 out of 350 worldwide) and is the only vendor currently shipping mobile WiMAX ready base stations. Mobile WiMAX itself is purported to grow from 0 today to $5B in 5 years. There are a lot of opportunities for ALVR on the horizon, both near and far.
Clearly, Alvarion is a key thematic investment in the entire WiMax roll-out and if ThinkEquity is right (i.e., WIFI and WiMAX will deploy in blended format), ALVR will leverage its exposure to FMC (fixed-mobile convergence) as cell phone companies make headway in the inefficient wireless telephony architectures for a majority of all calls made/received.
CSCO seems to be making a technology bet if they scoop up Navini — a move that will give them a strong, but not dominating, presence in WiMAX. I’d rather put my chips on ALVR and its business and financial operating history, complete with cash on the books and no debt. Regardless, if CSCO does decide to move forward into WiMax with an M&A of Navini, it provides a huge seal of approbation for WiMAX and means a huge player, previously lukewarm to the idea, is getting serious about it.
ALVR should benefit regardless of the outcome.
Disclosure: Author’s fund has a position in ALVR as of 10/15/07.
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Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC. and a former equity analyst for a leading multinational hedge fund. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email zack@profile-financial.com
Written by: Aaron Katsman | October 2, 2007
By Aaron Katsman
IsraelNewsletter.com
Radvision(RVSN), an innovator in the video-conferencing over IP, wireless and desktop markets, yesterday lowered their revenue forecast for the 3rd quarter. The stock, in turn, got squashed. In late July the company had forecasted revenues of $25 million( this was the first lowering of estimates as analysts had expected almost $27 million in revenue) and yesterday lowered expectations to $20.5 million. In Q3 ‘06 Radvision produced $23.6 million in revenues. Great! so we have have a company that keeps saying that they are in such a hot, video-conferencing, space, and they have shrinking revenues.
In a slightly bizarre comment, Boaz Raviv, Chief Executive Officer, commented: “We are disappointed by this setback in the third quarter but remain fully confident in our strategy and market position and in the growth prospects of videoconferencing in the enterprise and service provider markets.” The company added that, ” its revised third quarter outlook reflects a reduced revenue forecast for its Networking Business Unit (NBU) due to lower than expected sales both to the federal market and through its channels.”
Could it be that the company has neglected growing the business by getting new customers, and been relying too much on their relationship with Cisco(CSCO)?
About 3 weeks ago the stock was upgraded by analysts. Ouch! Since the upgrade the stock has gotten crushed, but I believe the argument that they made still holds water. The upgrade came on the heels of Tandberg ASA, a Radvision competitor, announcing that it would acquire a third video conferencing company, U.K.-based Codian Ltd., for $270 million, beating others to the punch. It was thought that Cisco was interested as well. Analysts viewed this deal as a win for Radvision as it soldifies their Cisco relationship. It’s great that the Cisco relationship is stronger than ever, but I go back to what I mentioned before. Don’t they need to try and grow business outside of Cisco? We all know the danger of having just one big customer. At $14.50 the stock looks interesting. Okay, so I said the same thing at $20, but now it’s even 25% cheaper. “Instant Rebate” Katsman can smell a good deal.
I will say that if we don’t start seeing some real growth, regardless of the Cisco relationship, I would be a seller, but let’s give it a bit more time.
Please see our Disclaimer HERE.
Disclosure: Author’s fund is long RVSN as of 10/2/07. Author has no positions in any other companies mentioned.
Like what you see? Sign up to receive daily updates from IsraelNewsletter here
Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
