Author: Vivian Lewis
Disclaimer: Vivian currently owns GSK in her Covestor International Yield Model.
Mellanox (NYSE: MLNX) is the Israeli maker of connectivity devices for servers, ethernet and financial data centers, storage systems, cloud computing, and supercomputers. On July 21, 2010 MLNX reported after the market close 2Q2010 revenues at $40 mn, up 10.4% sequentially, and 58% year over year ). MLNX reports “bilingually”, in generally accepted accounting principles and also in non-GAAP (like other Israeli Nasdaq firms). Net GAAP income was $5.3 mn (15 cents/sh); non-GAAP (mainly from putting back Israeli employee share-based compensation and tax deferral expenses) was $10.4 mn, or 29 cents. GAAP net was flat from Q1 and up 205% YOY; non-GAAP was flat sequentially and up 124% YOY. MLNX gross margins were 74.5% and barely budged from earlier periods. Thanks to $13.7 mn in cash from operations, MLNX now has just under $234 mn in cash and equivalents.
So I worry they will shop with those shekels, but then figure they can't find any target with technology as good as theirs. Negatives: MLNX delayed some faster “market-changing boards to silicon” conversion (their jargon) launches until early 2011 while boosting sales efforts on another less demanding (unnamed) technology in 2Q2010. There were higher expenses for R&D and global selling not offset by tighter credit and inventory controls. Short term MLNX expects some PC line revenues to drop in 3Q2010 after they also fell in 2Q2010, but longer term they expect a pickup ).
Forecasts for 3Q2010 were sales up to $37-37.5 mn, with a gross margin of 73-74%, both below 2Q2010 https://www.reuters.com/article/mellanox-shares-idCNSGE66L0PT20100722).
The Portuguese government is being sued by the Associação Portuguesa de Investidores e Analistas Técnicos do Mercado de Capitais and its Spanish equivalent over its use of a “golden share” to block a bid by Telefónica (NYSE:TEF) to Portugal Telecom (NYSE: PT) for its share of the Dutch holding company which controls Vivo, a Brazilian cellular telco. This battle will run for years.
Activis won FDA premission to sell 3 sizes of generic Wellbutrin, the GlaxoSmithKline (NYSE: GSK) anti-depression med. This was not the only reason GSK fell on July 21, 2010. There also was the FDA's decision to suspend on ethical grounds the TIDE trial among type 2 diabetics comparing Avandia with Actos from Takeda https://www.reuters.com/article/glaxo-avandia-idCNN2116372320100721). However, already-enrolled patients are allowed to continue. The study aims to check on heart safety of the two meds. It is possible that the FDA will authorize resuming the study after it reviews the advisory committee report of last week. A third reason for the price drop yesterday is that analysts were still working out the impact of the 2Q2010 reserves announced only last week so their forecasts could not be compared to what GSK reported.
Dr. Reddy (NYSE: RDY) reported in rupees on its 1Q2010 of FY 2010-11. Sales fell to Rs 16.8 bn ($363 mn), off 7% and profits at Rs 2.1 bn ($45 mn) were off 14%. In the quarter RDY sold for $4 mn its transmarks and products in Brazil to GSK ).
