Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Israeli network gear builder Mellanox Technologies
So what: Mellanox just reported a great fourth quarter, utterly shocking all six analysts who follow it with beats on both the top and bottom lines. Management gives credit to strong market adoption of its high-speed Ethernet and InfiniBand products, and points to a slew of upcoming product releases that should keep the good times rolling.
Now what: You may have seen Mellanox and its products without realizing it: These components typically ship as part of servers and storage systems from household names such as IBM, NetApp, and Hewlett-Packard. Ever-increasing appetites for huge bandwidth feeds across the data center should keep Mellanox in the loop for years to come. A word of warning: As great as the results were, margins are under pressure all over the income statement. Perhaps the company should settle for a spell of slower revenue growth in order to capture stronger margins and fatter profits.
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