Server and storage networking equipment maker Mellanox Technologies raised its guidance for its third quarter ended September 30.
The company said in a statement that it expected revenues to fall between $32m and $32.5m in the third quarter, up from its previous guidance of $28.5m to $29m. That means on a year-on-year basis, business is up rather being flat to down versus the third quarter of 2008, when Mellanox had $29.1m in sales and $5.2m to the bottom line, or 16 cents per share.
Sales flattened off as 2008 came to a close and dropped a bit throughout the first half of 2009, and profits have been slammed, too. In the second quarter of this year, Mellanox had sales of $25.3 m and brought $1.7m to the bottom line, or five cents per share.
Wall Street and company employees are no doubt both happy that Mellanox is saying it was able to show sequential growth of 26 to 28 per cent compared to Q2 2009, which may mean that the high-end network switch and adapter business might be pulling out of the economic downturn ahead of servers and storage. Gross margins have been falling in the past several quarters, and Mellanox had been telling shareholders to expect gross margins in the range of 72 to 73 per cent in Q3 of this year, but now says gross margins will come in at between 73.5 to 74.5 per cent.
That may not be as high as a year ago, when gross margins were at a compelling 79.1 per cent, but it is at least heading in the right direction.
The top brass at Mellanox are certainly pleased by the news, particularly since according to this filing with the Securities and Exchange Commission, the five top executives who took salary cuts in February 2009 as the meltdown crunched have had their salaries restored as of last Friday.
As El Reg goes to press, shares in Mellanox are up 6.8 per cent to $17.25, giving Mellanox a market capitalization of $517m. With news swirling around that networking company Brocade Communications has put itself up for sale, and perhaps with Hewlett-Packard sniffing around to acquire Brocade, which has a $3.2bn market capitalization, Mellanox might also be a target; and a much cheaper one for system companies who want to bolster their presence in supercomputing and other HPC areas. ®