Why EZchip Semiconductor Shares Jumped
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 Ethernet-network chip maker EZchip Semiconductor (NAS: EZCH) have jumped today by as much as 12% after the company reported better-than-expected earnings.
So what: First-quarter sales increased 9% to $14.4 million, topping the $14.1 million estimate. Non-GAAP net income also came out ahead of expectations at $7.8 million, or $0.27 per share, while analysts were just looking for $0.25 per share. Gross margin rose to nearly 85%, nearly 10% higher than a year ago.
Now what: CEO Eli Fruchter said that EZchip saw record sales to the company's largest customer, Cisco Systems (NAS: CSCO) , which is the first customer to adopt EZchip's NP-4-based platform that was just launched. Some customers are already beginning NP-5 designs and EZchip feels confident that it will lead the way in edge routing. So far, the initial feedback from customers has been "extremely positive."
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At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Cisco Systems. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.