I had to ask myself after the last CC why, after years of not providing guidance, would VTSS suddenly change? It seemed obvious, they are now interested in interesting the Street where clearly they had not been in the past. Then they set a Revenue Goal that they probably can "Beat" right around the time that they SHOULD be getting relisted. It might well indicate that things are going to FINALLY fall in place and this thing might actually begin to resemble a company.
On the other hand (other shoe theory) they probably will come out with a "going concern" statement in the year-end report and screw the monkey again!
Posted by Satbob - 17 years ago
Thought I would go back and visit some old VTSS friends. For us old guys Nu Horizons was a partner in crime when it all hit the fan a number of years ago. NUHC at one point was a very significant distributor/customer for VTSS.
NUHC is being acquired. This is interesting in and off itself but it is being acquired at a 100% premium to the market price prior to the deal. Don't see that kind of a premium often, almost never.
http://www.reuters.com/article/idCNSGE68J0K820100920?rpc=44
Posted by dlog - 17 years ago
I think the key issue for Vitesse is how well they will do in the carrier market (where they did so badly last quarter). There’s a major change underway in this market as reported by Heavy Reading (they’re calling it a revolution):
"Chip Makers Gear Up for Packet-Optical Deployments"
“Most carriers are expected to shift to packet-optical transport over the next five years. Packet-optical transport platforms (P-OTP) will also be widely used in mobile backhaul applications, a key investment area for carriers driving LTE-based 4G services.”
http://www.heavyreading.com/commchip/
This is where carrier infrastructure investment is heading and Vitesse is one of 12 chip vendors that are addressing this market and are highlighted in this report (the cost is $1595 if you’re interested). The P-OTP market is expected to ramp up next year and reach $1.7 billion in 4 years. Vitesse has products available now, but there is strong competition and requirements/solutions can change rapidly.
“Highly integrated semiconductor devices are needed to deliver the benefits expected by carriers. Five leading telecom semiconductor vendors are making significant investments in this market.”
I don’t know if VTSS is one of the “five leading telecom semiconductor vendors”. I believe AMCC, PMCS, Cortina and Altera are in the top five. In fact AMCC just brought TPack (one of the 12 chip vendors in the report) for about $1M per employee. If VTSS was valued the same way it would be worth $480M (about $20/share). I noticed that neither BRCM nor MRVL was in the report. That means they each need an acquisition or they miss this boat.
My concern is that VTSS does not have enough financial strength to make the investments needed to succeed. I’m hoping that someone with deeper pockets decides that since VTSS has their foot in the door, an acquisition would be a smart way to get a strong position in this emerging market.
Posted by thereinman - 17 years ago
Some very good thoughts on the various recent threads. Here’s my take at tying some of them together, then adding my judgment to the mix, making it all worthless in the end.
I think CG knows this market pretty well. He has known what it will take in terms of R&D investment in new products to be one of the 12 or the 5 survivors, which is why R&D spending remained high throughout this debacle when cost cutting would have seemed to have been the order of the day.
CG put this company on a “bet the farm” path several years ago. For them, it’s a 10X return on their regularly re-priced options, or nothing. The only trouble is, he and RY are essentially gambling with someone else’s money, our money, which allows you to take risks you would not normally take with your own money/mortgage/kid’s education on the line. They’ve got a nice deal going for themselves here, using my kid’s college tuition as the big bet on RED that buys them that vacation home in Aspen if RED comes in. If not, their base salary is still nothing to sneeze at.
Normally you’d have a BOD in place holding them accountable. Look what happened, and how quickly it happened, to Mark Hurd at HP. That’s accountability, something we haven’t seen at VTSS in half a decade. Now I’m afraid all the other major players are in on this bet-the-farm scheme as well. They’ve all essentially recovered their initial investment in the 2024 converts, and from here on out for them it’s all gravy/icing, including WB. They’ve told CG to go ALL IN. He has their permission and their blessing. If all goes well, the big players all make 3x, 5x or 10x, and we manage to break even. If it goes belly up, they break even and we, well, we do whatever retail losers do (ride off into the toxic sludge or something, I guess).
CG and RY have been incompetent, yes, but not in the areas where WB and the bondholders care about. They don’t need financial geniuses; THEY are the financial geniuses. They have exactly the financial structure in place that they want. What they really need is a product guy (CG) and a marketing guy (Perna). RY is just their temporary bookkeeper.
Their time horizon can’t be too long, probably the 5 year, 2014 deadline they put on the bonds. There won’t be a sale or merger until 2014; for the time being it’s all about 30 new products/year being able to generate $50 to $60M a quarter in revenue ASAP.
Posted by LMS - 17 years ago
I know Arrow paid a 100% premimum for NUHC. However, look at some of the multiples.
1. if forward earnings are $0.50 per share, the acquisiton multiple was 13.5
2. if annual revenues were 700-800 milion the multiple was about .2 x's sales.
3. the multiple of cash to equity, upon sale, was 6.
Is this a sign of the times? Or, did the BOD sell on a first come, first served basis?
Posted by matt38 - 17 years ago
Kopp had added another 200k shares per new SEC filing. Now owns ~1.7 million shares, or 7.2% of total.
LMS, your post may very well be correct, and therefore extremely depressing. I certainly hope, and do think, SatBob is correct and this nightmare is ending, at least to the extent that Vitesse will get relisted at the beininning of 2011....but having CRG continue to 'lead' this company (using 'lead' in the loosest possible terms) given his track record pretty much guarantees this company will never be successful.
I much more hope here that Perna was recruited by the new BOD guys, was forced on Gardner and will replace CRG shortly. Maybe Perna can get rid of the worthless Sweet Baboo also, and she can go back to watching the afternoon soaps.
Posted by altrfan - 17 years ago | Updated 17 years ago
Hey, we hit $0.215 today! A whole 3 cents higher than the old 52-week low from 2009! Anything you bought below twenty cents is now back above water! (just keeping things in perspective).
Posted by LMS - 17 years ago
Nice growth rate predicted for Ethernet switch market targeted by new Vitesse products. And I like Perna's comment about being a "pioneer in green ethernet switch technology".
Vitesse Leverages MIPS(R) Processor IP for New Eco-Ethernet Switch Families
Oct 13, 2010 09:00:44 (ET)
SUNNYVALE, Calif., Oct 13, 2010 (GlobeNewswire via COMTEX) -- MIPS Technologies, Inc. (MIPS, Trade ), a leading provider of industry-standard processor architectures and cores for digital consumer, home networking, wireless, communications and business applications, today announced that the latest Ethernet switch families from Vitesse Semiconductor Corporation, a leading provider of advanced IC solutions for Carrier and Enterprise networks, are powered by MIPS(R) processors. Both the newest members of the SparX-III(TM) Ethernet switch family and the new Caracal(TM) family of Ethernet switches take advantage of MIPS' performance/power efficiency advantages and feature Vitesse's EcoEthernet(TM) v2.0 green technology, delivering high levels of energy efficiency along with high performance to address increasing network bandwidth.
Vitesse's SparX-III switches (VSC7424, VSC7425, VSC7426 and VSC7427) are designed for green enterprise and small/medium business and enterprise (SMB/SME) applications, including customer-premises equipment on the network edge, and multiple dwelling unit/multiple tenant unit access devices. According to Vitesse, the SparX-III family enables industry-leading power savings, differentiated service delivery, and network security essential to next-generation green enterprise and SMB applications. The devices deliver up to 25 percent faster network management than competitive solutions targeted at the SME market, and can reduce power consumption in SME networks up to 50 percent.
Part of Vitesse's broad, scalable family of Carrier Ethernet Switch Engines, the new Caracal solutions (VSC7428 and VSC7429) target carrier Ethernet, mobile backhaul and fiber-to-the-home (FTTx) passive optical network (PON) applications. The family features network timing and performance monitoring capabilities which are essential for migrating mobile backhaul or packet-based 3G and 4G wireless networks. The embedded MIPS processors can run customer management and control software while delivering a warm restart capability that allows network providers to reload software and reboot the switch without interrupting customer service. According to Vitesse, the Caracal switches are among the most fully featured, low-power carrier Ethernet solutions in the industry for mobile backhaul and access applications.
"We chose MIPS because of its leadership in providing high performance and quality of service along with low power--all essential for next generation packetized networks," said Steve Perna, vice president of product marketing, Vitesse. "As a long-time MIPS licensee, we are excited to again leverage the industry-standard MIPS processor architecture as we establish Vitesse as a pioneer in green Ethernet switch technology. MIPS' processor IP allows us to satisfy our customers' requirements for high-performance, flexible and power-efficient networking solutions that adhere to today's stringent environmental standards."
According to The Linley Group's Communications Semiconductor Market Forecast 2009-2014, shipments of ASSP-based GbE (Gigabit Ethernet) switches are expected to have a compound annual growth rate (CAGR) of 31.4% from 2009 to 2014, with GbE switch shipments growing quickly for reasons including the transition from Fast Ethernet to GbE, as well as faster broadband (PON) and mobile broadband speeds.
"MIPS Technologies has a strong presence across networking markets, including enterprise networking. Our presence is growing as companies increasingly recognize the performance and power benefits of the MIPS architecture--benefits that will become ever-more appealing with the move to higher bandwidth networks and new green requirements," said Art Swift, vice president of marketing and business development, MIPS Technologies. "We're pleased to be working with innovative companies like Vitesse as they develop MIPS-Based(TM) solutions that deliver exceptional performance, affordability and power savings--and protect the environment."
About Vitesse
Vitesse designs, develops and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for Carrier and Enterprise networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in high-performance Ethernet LAN, WAN, and RAN, Ethernet-over-SONET/SDH, Optical Transport (OTN), and best-in-class Signal Integrity and Physical Layer products for Ethernet, Fibre Channel, Serial Attached SCSI, InfiniBand(R), Video, and PCI Express applications. Learn more about Vitesse's EcoEthernet technology at www.vitesse.com/green . Additional company and product information is available at www.vitesse.com .
About MIPS Technologies, Inc.
MIPS Technologies, Inc. (MIPS, Trade ) is a leading provider of industry-standard processor architectures and cores that power some of the world's most popular products for the home entertainment, communications, networking and portable multimedia markets. These include broadband devices from Linksys, DTVs and digital consumer devices from Sony, DVD recordable devices from Pioneer, digital set-top boxes from Motorola, network routers from Cisco, 32-bit microcontrollers from Microchip Technology and laser printers from Hewlett-Packard. Founded in 1998, MIPS Technologies is headquartered in Sunnyvale, California, with offices worldwide. For more information, contact (408) 530-5000 or visit www.mips.com .
MIPS, MIPS32 and MIPS-Based are trademarks or registered trademarks in the United States and other countries of MIPS Technologies, Inc. All other trademarks referred to herein are the property of their respective owners.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: MIPS Technologies, Inc.
CONTACT: MIPS Technologies, Inc.
Media Contact:
Jen Bernier-Santarini
+1 408-530-5178
jenb@mips.com
Posted by thereinman - 17 years ago
Therein, Nice piece, Thanks for sharing!
Perna will take this company to the next level, he will save the day for all of us! watch and see.
Posted by GARIF - 17 years ago
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