What's the connection between SanDisk Corporation (Nasdaq:SNDK) and Marvell Technology Group (Nasdaq: MRVL)? Basically nothing, except for the fact that both made impressive acquisitions in Israel in the past decade. SanDisk bought msystems, and Marvell bought Galileo, each at valuations of $1.5 billion.
Additionally, in the past year, Marvell entered the NAND field when it developed and began to sell SSD controllers, which are flash based storage drives. On Friday, Samsung provided a new connection between the two, and Marvell shares rose 5%.
The day before that, Samsung officially reported to the Securities Authority in Korea that it has conclusively ended its intention to buy SanDisk. Noone fell off their chair in surprise, since it was clear as early as April, when the two companies signed their new royalties agreement. It is interesting that Samsung said that the reason for pulling out of a deal to buy SanDisk was "lack of progress", but it is not clear from the notice if any talks were held recently, or only before the new royalties agreement was signed in April.
There were speculators in the market who understood that Samsung's notice was meant to advance another big deal, and bets were on Rambus (Nasdaq: RMBS), which, like SanDisk, is an intellectual property company, but in the DRAM field. Rambus shares jumped 11% on Friday on huge turnover, but not long after, Samsung denied the rumor.
Then various Internet sites began to mention Marvell as a potential takeover target for Samsung, and Marvell's share responded in kind. There are those who say that Marvell's announcement last Monday about entering the cellular chip market in China through collaboration with China Mobile (CHL), the largest cellular company in the world, by number of subscribers, will turn it into a takeover target for giant chip companies such as Samsung.
In my opinion, with or without Samsung, Marvell shares will continue to rise, because its recent results and guidance, which it reported at the end of Augsust, show it can be safely concluded that it is entering a good period, in which nearly all its growth engines - from cellular, through storage chips, and up to chips for landline communications and Wi-Fi- will operate well in coming quarters.
Marvell is also among the only technology shares recommended in a Barron's cover article in which ten well known strategists were asked about the market's direction over the remainder of the year.
Another rumor connected somehow with Israel arose on Friday, when a Barron's technology blog wrote that sources claim Micron Technology (NYSE: MU) is interested in entering the NOR flash memory market in addition to NAND, through the acquisition of Numonyx, owned equally by Intel and ST Micro. Numonyx has a large flash memory facility in Kiryat Gat, which was the source of heavy losses for Intel for many years, and which recently began to gain ground, after the collapse of Spansion.
Published by Globes [online], Israel business news - www.globes-online.com - on September 8, 2009
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