Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) share price fell 20.37% in after-trading on Nasdaq, giving a market cap of $1.76 billion, after the company announced far lower than expected guidance for the first quarter of 2013. The share price was down 15% on the TASE this morning at NIS 153.60. Analysts had predicted revenue of $129 million in the current quarter but Mellanox predicted revenue of just $78-83 million, sending its shares into a tailspin.
Mellanox said that the disappointing forecast was due to the build-up of about $30 million in inventory, mainly at one of its customers. According to Mellanox chairman, president and CEO Eyal Waldman, "The customer saw the rate of sales in the first three quarters of 2012, which were higher than predicted, and assumed they would continue at the same pace, and thus the inventory grew when demand fell in the fourth quarter."
Earlier Mellanox reported revenue of $122.1 million for the fourth quarter of 2012, down 22% from $156.5 million in the preceding quarter, and up 68% from $72.7 million in the corresponding of 2011. For 2012, revenue was a record $500.8 million, up 93.2% from $259.3 million in 2011.
GAAP net profit in the fourth quarter of 2012 was $18.4 million ($0.41 per share), compared with $48.4 million ($1.09 per share) in the preceding quarter and $4.7 million ($0.11 per share) in the corresponding quarter of 2011.
Non-GAAP net profit in the fourth quarter of 2012 was $30.7 million ($0.69 per share), compared with $60.1 million ($1.37 per share) in the preceding quarter, and $13.1 million, ($0.31 per share) in the corresponding quarter of 2011.
Mellanox added that the fourth quarter 2012 non-GAAP net profit excludes $10 million of share-based compensation expenses compared with $9.4 million in the preceding quarter, and $6.1 million in the corresponding quarter of 2011. Fourth quarter 2012 non-GAAP net profit also excludes amortization of acquired intangible assets of $2.3 million associated with the acquisition of Voltaire in 2011.
Total cash and investments increased $184.9 million to $426.3 million at the end of 2012 compared with $241.4 million at the end 2011. The company generated $25.4 million in cash from operating activities in the fourth quarter, and a record $182.5 million for the year.
Mellanox, which gave its first-ever profit warning for the fourth quarter of 2012, has now seen its share price fall 60% since September (before the further fall in after-market trading last night). In fact Mellanox had beaten the analysts' expectations with its fourth quarter results. However, it was the dismal guidance which captured the attention.
Waldman said, “We are proud of our results for 2012, which was an outstanding year. Mellanox achieved record levels of revenue, cash flow and profitability, driven by growth in our strong product offerings and penetration into new and existing markets. We doubled the volume of silicon unit devices shipped from 2011 to 2012 to a record 1.1 million, highlighting our increased market share growth."
He added, "We are disappointed we did not meet our revenue guidance for the fourth quarter. Our results were impacted by a weaker demand environment, challenging macroeconomic conditions, a build-up of inventory at an OEM customer, and a technical issue which was resolved during the quarter.”
Published by Globes [online], Israel business news - www.globes-online.com - on January 24, 2013
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