Ikanos Communications (NASDAQ:IKAN) will probably struggle in the near term as they absorb their recent equity offering, which over the long haul should allow them to develop higher-margin products.
Needham, which maintains a "Buy" rating on them, said this, "We believe the recent offering strengthens the company’s balance sheet and provides additional flexibility for the new management team to effect the transition to a company focused on proprietary, higher margin products. We expect the ramp of new proprietary products, including the company’s NodeScale Vectoring solutions for the CO and new communication processors for CPE equipment, to drive renewed top-line growth and strong operating leverage beginning in 2012. Based on an earnings sensitivity analysis, we believe 2012 non-GAAP EPS could easily be in the $0.10 to $0.20 range. Though we expect investors will have to be patient through 2011 as the company brings new products to market, we ultimately believe IKAN investors will be rewarded."
Ikanos closed Tuesday at $1.05, gaining $0.03, or 2.94 percent. Needham has a price target of $1.50 on them, lowering it from the previous $1.70.
Wednesday, November 24, 2010
Hewlett-Packard's (NYSE:HPQ) Should Continue Unhindered
Seeing little if anything that can deter the accelerated growth of Hewlett-Packard (NYSE:HPQ), Needham & Company said they're maintaining a "Strong Buy" on the company.
Needham said, "A vast product portfolio. Unmatched global channel reach. A streamlined operating cost structure with a path for further improvement. A powerful balance sheet providing liquidity simultaneously for internal growth, acquisitions, buybacks and dividends. These dynamics make HPQ a unique juggernaut in the tech world, and one that cannot be easily jarred even by the loss of a CEO. While we watch with interest for how Leo Apotheker will imprint his vision on HP’s strategy, in the interim, we see little to detract from the company’s growth prospects."
The market seemed to agree with them Tuesday, as Hewlett closed at $44.19, gaining $0.94, or 2.17 percent.
Volume soared to over $51 million, more than double the $23 million 3-month daily average. Hewlett's market cap is just over $100 billion as of Tuesday.
Needham said, "A vast product portfolio. Unmatched global channel reach. A streamlined operating cost structure with a path for further improvement. A powerful balance sheet providing liquidity simultaneously for internal growth, acquisitions, buybacks and dividends. These dynamics make HPQ a unique juggernaut in the tech world, and one that cannot be easily jarred even by the loss of a CEO. While we watch with interest for how Leo Apotheker will imprint his vision on HP’s strategy, in the interim, we see little to detract from the company’s growth prospects."
The market seemed to agree with them Tuesday, as Hewlett closed at $44.19, gaining $0.94, or 2.17 percent.
Volume soared to over $51 million, more than double the $23 million 3-month daily average. Hewlett's market cap is just over $100 billion as of Tuesday.
Brocade (NASDAQ:BRCD) Faces Challenges in Ethernet Segment
While maintaining a "Buy" rating on Brocade (NASDAQ:BRCD), Needham & Company says they're concerned about the short-term effects of the Ethernet segment of the company, as the SAN business remains solid.
Needham said, "Execution in core SAN business continues solid but challenges in Ethernet continue/remain. In Ethernet, BRCD is focusing more on enduser demand generation, channel development, sales related hiring and launching its recently announced next generation Ethernet fabric technologies - all which could take some time to be effective."
Brocade was crushed Tuesday, closing down to $5.13, losing $0.57, or 10 percent. Needham has a price target of $6.50 on them.
Needham said, "Execution in core SAN business continues solid but challenges in Ethernet continue/remain. In Ethernet, BRCD is focusing more on enduser demand generation, channel development, sales related hiring and launching its recently announced next generation Ethernet fabric technologies - all which could take some time to be effective."
Brocade was crushed Tuesday, closing down to $5.13, losing $0.57, or 10 percent. Needham has a price target of $6.50 on them.
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