Investors clamored for allocations of yesterday's Cavium Networks
Cavium develops chips that help improve how computer networks process voice, video and data traffic. With the surge of e-commerce, social networking, and online video, computer networks certainly need lots of help.
Cavium's more than 100 customers, including Cisco
Though the company lost $8.9 million on the bottom line last year, things are looking better. Cavium lost only $997,000 in the first quarter of 2007. R&D expenses are eating into Cavium's net income; they devoured $4.3 million, or 38% of revenue, in the first quarter. Nonetheless, the company's research efforts are helping it amass a considerable portfolio of intellectual property.
Cavium faces rivals such as Broadcom
Assuming it posts revenue of $50 million for 2007, Cavium is now trading at a hefty 12 times forward revenue. Other hot tech IPOs such as DivX
Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is ranked 1,751 out of 28,345 in Motley Fool CAPS. Intel is a Motley Fool Inside Value pick. The Fool has a disclosure policy.