Israeli big data connectivity company Mellanox Technologies Ltd. (Nasdaq:MLNX), which hopes to complete its merger into Nvidia in the coming months (Chinese regulator permitting), reported strong third quarter results yesterday after the close of trading. The company led by founder and CEO Eyal Waldman, reported $335 million in revenue in the third quarter of 2019, 20% more than in the third quarter of last year. Operating profit in the quarter amounted to $49 million, 26% more than in the corresponding quarter of 2018, while net profit totaled $44 million, $0.78 a share, 19% better than in the corresponding quarter last year.
Mellanox develops communications chips according to the InfiniBand standard, a technology designed to speed up data transmission between services and storage systems by means of communications systems. In March this year, Mellanox and US processors giant Nvidia announced a merger, which has not yet been completed. Under the terms of the deal, Nvidia, whose current market cap is $124 billion, will acquire the Israeli company for $6.9 billion at $125 per share.
The two companies expected the deal to be completed by the end of 2019, subject to obtaining the necessary regulatory approval. Among other things, this involves regulatory approval from various authorities around the world, including China, because the two companies operate in the international market. Mellanox's current $112 share price, which is more than 10% lower than the share price in the merger deal, represents a $6.1 billion market cap.
Mellanox's revenue totaled $951 million in the first nine months of 2019, 19% more than in the corresponding period in 2018. Its operating profit doubled to $136 million in this period, and its net profit of $131 million was 44% more than in the corresponding period last year.
Mellanox's cash flow from current activity in the third quarter amounted to $130 million, almost twice as much as in the third quarter of 2018. The company had $742 million in cash as of the end of September.
"Mellanox achieved record-breaking revenue and cash flow from activity in the third quarter, with growth in all of our main product lines. Sales of Ethernet adapters were 28% higher than in the second quarter. We started providing ConnectX-6, the world's first Ethernet adapter with a speed of 200 GB/s and hardware encryption, which will facilitate security deployment in all enterprise data centers and on the cloud. We are also seeing good adoption of our Ethernet switches in a broad range of data center applications, including hyperscale, artificial intelligence, cloud computing, storage, and financial markets, resulting in 25% growth in comparison with the preceding quarter," Waldman said.
"We also had growth in our InfiniBand solutions, powered by adoption of our 200 GB/s HDR in high-performance computer services, artificial intelligence, cloud computing, and storage," Waldman added.
Published by Globes, Israel business news - en.globes.co.il - on October 31, 2019
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