Yesterday after the close of trading, a few weeks before completing its acquisition of EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH), Mellanox Technologies Ltd. (Nasdaq:MLNX) published its financial statements for the fourth quarter of 2015 and the full year. The company's results took the market by surprise: revenue was higher than the range of forecasts by both the company and the analysts, and the company's net profit was $0.07 per share higher than the analysts' forecasts. The Mellanox share price responded with a 7.9% jump in Wall Street trading.
Mellanox produces equipment for high-speed data communications on organizational networks. The company finished the fourth quarter with almost $177 million in revenue, while the range of forecasts published and confirmed only a few days previously was $171-176 million. The company's fourth quarter revenue was 25.4% higher than in the fourth quarter of 2014, and its 2015 yearly revenue climbed 41.9% to $658 million.
According to GAAP accounting rules, Mellanox went from red to black ink in the fourth quarter with a $43.2 million profit for the fourth quarter and a $92.9 million profit for the year. In non-GAAP reporting, excluding registration costs for employee remuneration, accounting depreciation, and expenses related to the acquisition, the company's fourth quarter net profit was $37.5 million, 34.1% higher than in the corresponding quarter of the preceding year, and its 2015 net profit was $138 million, 2.4 times its net profit in 2014. Net profit per share was $0.77 in the quarter and $2.89 for the year.
Mellanox generated $150 million from current activities in 2015, and finished the year with $510 million in cash. The company expects to pay $811 million for EZchip ($610 million net of EZchip's cash), and to use a $300 million bank loan to help pay for it.
"We are pleased to achieve record quarterly and annual revenues. Our profitability grew 2.4 times year-over-year with operating income representing 21.3% of revenues," Mellanox founder and CEO Eyal Waldman said. "We are proud to grow our annual net income to $138.5 million and generate $150.5 million in cash from operations in 2015 - while we continued to invest in our technology and businesses. We saw strong growth in our Ethernet business in 2015, and expect it to accelerate in 2016 and beyond. We are pleased to see our InfiniBand business continue to grow across multiple markets and technology generations, with strong adoption of our EDR 100 Gigabit InfiniBand products.
"We look forward to closing the EZChip merger in the second half of February 2016. This merger is important to Mellanox and adds processing capabilities to our networking technologies. We believe the combination of these technologies will lead to a superior position in the data center interconnect market." Mellanox's market cap is $1.8 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on January 28, 2016
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