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Mellanox Technologies, Ltd. : Mellanox Cuts 4th-Quarter Revenue Outlook on Weakened Demand

01/02/2013 | 04:43pm US/Eastern
   By Ben Fox Rubin 

Mellanox Technologies Ltd. (MLNX, MLNX.TV) sharply reduced its fourth-quarter revenue projections, as the data-storage company cited weakened demand, among other issues.

The company now expects quarterly revenue of $119 million to $121 million, below its previous guidance of $145 million to $150 million. It now expects annual revenue of $500 million, below current estimates of $527 million from analysts polled by Thomson Reuters.

Mellanox cited softer demand, challenging macroeconomic conditions and technical issues associated with FDR 56Gb/s InfiniBand cabling that caused approximately $20 million of FDR deployments to be delayed. The company added that the cabling issue has been resolved and isn't expected to impact revenue in the future.

The company, which also backed its adjusted gross margin guidance, plans to discuss its fourth-quarter results on Jan. 23.

Mellanox provides interconnect products for data centers--essentially pipes that connect servers and other hardware to each other--using the high-speed InfiniBand technology standard. Its products have been popular in supercomputers that allow users to perform tasks such as weapons research, but they are now gaining traction with organizations seeking advanced technology in their own data centers.

Mellanox, whose sales were projected to quintuple from 2007 to 2012, was expected to continue growing at a steady clip. The introduction of a new server processor by Intel Corp. (INTC), dubbed Romley, has been spurring more data-center spending and benefiting Mellanox, while increased adoption of cloud computing was raising demand for the company's InfiniBand interconnect products.

Shares closed Wednesday at $61.19 and were halted after hours. The stock is down 41% over the past three months.

Write to Ben Fox Rubin at ben.rubin@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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