Netlogic satisfies

NETL reported revs and EPS ahead of expectations and guidance was better than expected also. What was a big positive for me was the ability of NETL of to deliver a solid 10% revenue growth without any growth driven from its largest customer- CSCO. There has been plenty of naysayers out there blabbering about how a majority of NETL revenues are dervied from CSCO and how that is a bad thing. I agree there are risks when you have a large portion of revenue from one customer- like PLAY. What I disagree with is the premise that NETL lives or dies with CSCO. NETL delivered a staggering 50% growth sequentially from customers other than CSCO. NETL was also able to deliver strong gross margins even after giving CSCO some price discounts. The reason CSCO sticks with NETL is not because there is a inside connection; CSCO is as entrepreneurial as they come and the reason CSCO is sticking with NETL is because NETL has superior products at price points that make them the only choice. Yea one day IDTI will be able to get few more sockets with its IBM-bought products but that day NETL will be on the next chapter- like the partnership with AMD or BRCM. And we know CSCO keeps trying to make these chips in-house so there is always risk.

CSCO revenues for NETL were down 5% sequentially and it does not mean CSCO is having a bad quarter. CSCO quarter is having some issues at the end but they will pull it out just fine. NETL is not for a faint of heart but if you want a superior technology name with strong IP and customer roster most semis companies would die for then NETL is for you. Yea you have to pay up to own quality name just like QCOM and I am willing to bet NETL continues to perform.

Fasten your seat belt NT shareholders

Mike Zafirovski had a coming out party at CTIA-sort of. The CEO of NT made a rare public appreance at the CTIA conference making some bold statements. Mike wants NT employees to be "boy scouts" who would do the right things. I guess the Finance department is going to be outsourced going forward, since they have not been able to do the right thing for a while now.

Mike wants NT to exit every business where it holds less than 20% market share. In telecom that is a tough task, which most likely will lead to NT exiting bunch of businesses. By some estimates 65% of NT revenues come from businesses where NT has less than 20% market share . I am not a current NT share holder but losing 65% of revenue stream is going to be a one really bumpy ride. Surely, all the investment bankers are drooling over what this means to their bottom lines. The bankers can line their pockets by marrying NT with others so the combined entites can hold greater than 20% market share. Now you know why there are so many sell-siders covering NT- it's the banking fees and we all thought sell side research was "born-again".

I guess NT shareholders are hoping that Mike can do what Jack Welch (Mike was previously employed at GE prior to MOT) accomplished at GE. But GE is a congolomerate in everything from jet engines to electric turbines, NT is a telecom equipment provider. Maybe Mike wants to make the Canadian treasure into a congolomerate? Mike believes he can turn around NT in 3 to 5 years. Sorry but it's a very fast changing industry where customers are gaining more bargaining power with consolidation and competition is heating up with vendors marrying each other. A 3 to 5 year transition plans might work well in McKinsey consulting slides. But given Mike's resolve to turn NT around, it's worth a shot and value players can own the stock it's not what I can park my money in.

Chalk one up on the Win column

EXTR pre-announced a miss today after the close. Company blamed weakness in U.S and Japan for the miss. Like I said few days back, I would stay away from EXTR. The company has been in internal ups and downs and from what I can gather it is not smooth sailing yet. I believe the weakness in U.S. and Japan was due to these internal issues not due to any broad market weakness. FDRY I believe is having a blast in the U.S but Japan remains a issue and also I hear government was tough in opening up the purse as well. Hopefully it works out well for FDRY (meaning U.S. is strong enough to overcome the other issues) given the strong run up the stocks' had otherwise its time to book some profits there also.

The 8K EXTR filed on February 13th with details of severance plan for the executives and certain VPs upon change in control of EXTR still makes me think that the company might just get taken out, yea there are some seriously desperate people looking out there.

Seems like PKTR made the quarter but the issue remains that its in tougher market with old technology so I am still staying away from that one.

Money call from one of Wall St. Finest

RDWR lowered guidance on Sunday April 2nd but the stock was already down almost 13% on Friday March 31st. Call me naive, but you think maybe someone knew? The money call from one of Wall St. Finest Stanley Kovler was made on Friday; he published that he expects company to miss due to sales team transition in U.S, exactly the same reason given by RDWR in its press release. Was Stanley typing the press release for the company? Whatever his source was, he made a slam dunk call and his clients made (saved) money because of it.

RDWR is going through what we can call some "serious turbulence" in both products and sales team also RDWR is coming into crosshairs of more serious competitors. While RDWR refreshes its product offering the company is trying to bring in new sales team in the U.S. Not the best of times for smooth sailing for any company. This looks more like a company specific issues rather than weak geography. If I had to guess- there are few other companies in the networking industry that are in similar situation- names I am staying away from are EXTR and PKTR.