Nyquist Capital » PMCS

Broadcom Enters FTTH Chipset Market

Andrew Schmitt — Thu, 03 Jul 2008 15:07:00 +0000

Broadcom is entering the PON chip market and has secured design wins with a major tier-1 equipment vendor. While this is something predicted here, the timetable was sooner than expected. This will have a substantial impact on FTTH component and equipment suppliers as well as the carrier currently conducting lab trials with the device.

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Vitesse Q208

Andrew Schmitt — Mon, 19 May 2008 15:03:07 +0000

Vitesse provided a “State of the Company” update, most likely it’s last ad-hoc quarterly call as audited results are expected to be made available by next quarter. We analyze their core business trends, including discussions about Chinese GE-PON, an update on EDC/SFP+ 10GbE, and the impact of removing distributor incentives. While Vitesse is cheap when compared to peers the risk of an unanticipated short-term revenue decline poses an unseen risk.

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PMC-Sierra Q108

Andrew Schmitt — Tue, 29 Apr 2008 18:38:17 +0000

PMC-Sierra reported revenue at the high end of guidance but what caught investors attention was higher than expected revenue guidance for Q208. Of particular interest to readers should be PMC’s comments on FTTH in China and Japan, which we expand upon based on our in-depth knowledge of the area.

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LightReading Ethernet Conference Notes

Andrew Schmitt — Thu, 25 Oct 2007 19:01:27 +0000

This is a collection of notes and observations gathered during the LightReading Ethernet Conference that didn’t merit a standalone article. Unless noted, these conclusions were from conversations I had while at the conference, and not the opinions of presenters.

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DSL Market Consolidation Dynamics

Andrew Schmitt — Wed, 12 Sep 2007 20:27:14 +0000

The ongoing consolidation of DSL chip suppliers should create a positive structural effect on pricing and improve the overall health of the remaining players. Dave Burstein of DSL Prime fame points out that Broadcom (BRCM), Infineon (IFX), Conexant (CNXT), and Ikanos (IKAN) now account for 95% of DSL chipset market share. This is extremely positive.

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The Proving Ground of NTT

Andrew Schmitt — Tue, 28 Aug 2007 14:05:51 +0000

The Japanese Ministry of Internal Affairs and Communications is a great source for data on Japanese communication infrastructure and usage. A recent document provides a state-of-the-network update and lays out the goals for the next 3 years.

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Vitesse Sells Storage

Andrew Schmitt — Fri, 24 Aug 2007 21:01:31 +0000

After dropping hints in an earlier conference call (see Vitesse Q207 Conference Call Notes) Vitesse announced the sale of a portion of their storage products to Maxim (MXIM). The $63M transaction has a provision for an additional $12M if certain milestones are hit. The company will use the proceeds from Maxim and $30M in new convertible debt to repay the junk debt to Tennenbaum Capital. (see Tennenbaum and Vitesse).

Three months ago I expected the sale of the entire storage unit to fetch 3.5x revenue. Subsequent research and discussions led me to believe this estimate was inaccurate, something reflected in comments I made (see here).

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The Madness of the Carrier Chipset Market

Andrew Schmitt — Mon, 23 Jul 2007 22:00:41 +0000

There is an excellent editorial today by Lee Goldberg that explores the lack of new R&D in SONET/SDH and PDH chip sets. While I don’t agree with the conclusion it is a worthy topic of exploration and he highlights something missed by the mainstream tech media.

The networking industry may be about to hit a hidden speed bump as the number of semiconductor companies actively involved with developing products to support SONET/SDH, PDH, and other TDM-based technologies can now be counted on one hand.

Lee thinks this is a big problem. This is not a problem at all. It is the only logical solution to the madness of the past 6 years.

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PMC-Sierra Q207 Conference Call Notes

Andrew Schmitt — Fri, 20 Jul 2007 17:29:42 +0000

Here’s a quick snapshot of the PMC-Sierra (PMCS) FQ207 conference call.

Revenue up slightly based on the strength of storage and FTTH chips
Headcount down from 1182 to 1057 with a corresponding reduction in opex.

“Market Conditions Improving”, with Video being cited as the big driver I still would like to see someone somewhere step up to the plate and quantify this effect. Without data this is another “internet traffic doubling every 9 months” type of proclamation

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PMC-Sierra Adjusts Channel Accounting

Andrew Schmitt — Fri, 20 Jul 2007 16:50:50 +0000

In a trend I expect to snowball, PMC-Sierra (PMCS) announced they will begin using sell-through accounting as opposed to sell-in accounting with distributors. This is a trend which traces it’s origins back to the accounting issues at Vitesse Semiconductor (VTSS.PK). (see “The Trickle Down Economics of Channel Stuffing“)

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AMCC - Further Down the Spiral

Andrew Schmitt — Wed, 11 Jul 2007 19:53:13 +0000

AMCC (AMCC) held a conference call last Friday to review preliminary FQ108 results. The company indicated in April that FQ108 would be $60M down from $70M in the previous quarter (see “AMCC Kicks the Distribution Habit“). The final tally now puts it closer to $50M, a quarter over quarter decline of nearly 30%. This is worthy of detailed examination.

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FTTH Silicon Market Share

Andrew Schmitt — Wed, 13 Jun 2007 20:46:16 +0000

The latest Linley Group report on Networking Silicon Market Share provides a breakout of PON FTTH silicon market share for the second year running.. It includes both market size and market share information for all Networking markets, including PON. The key takeaway is that Linley believes the market grew only 20% in dollar size, though I estimate deployments grew worldwide over 50% year over year. Such is life as a semiconductor vendor.

They shared the following data with me.

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State of the Photon - Global FTTH Activity

Andrew Schmitt — Thu, 31 May 2007 21:56:39 +0000

I haven’t been shy about my prediction that GE-PON would trump GPON deployments and so far I’ve been right. The dominance of GE-PON continues, with large deployments planned or underway throughout Asia. Verizon (VZ) is the only carrier deploying BPON/GPON in size though some activity is promised in Europe. We shall see.

Let’s take a quick look at the state of the photon.

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Vitesse Q207 Conference Call Notes

Andrew Schmitt — Thu, 10 May 2007 16:39:31 +0000

Vitesse (VTSS.pk) delivered the required fiscal discipline in Q207. While running a super-tight ship does not come without downsides, at this point I believe the benefits outweigh the drawbacks.

My biggest concerns going into the call were inventory and cash management, and the company executed well in these areas in the face of declining shipments.

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Any Hope for Ethernet over PDH?

Andrew Schmitt — Fri, 04 May 2007 21:47:15 +0000

One area that I strongly believe will see greater capex in 2008-2009 is Enterprise Access. (see “Enterprise Access Capex - A Ray of Hope?“)

Cable modems forced the Telcos to dig DSL technology from the closet they were hiding it in order to remain competitive. The same forces are aligning today in enterprise access - but this time it’s dark fiber, PON, and even short range wireless that are the threats. What technology represents Telcos only hope of retaining business customers?

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Centillium - Next on Someone’s Shopping List?

Andrew Schmitt — Thu, 22 Mar 2007 13:59:35 +0000

The excellent Linley Group discusses Cortina’s recent acquisition of Immenstar, (my coverage here) a maker of FTTH silicon. Cortina is rapidly making itself as a consolidator communication silicon companies and Linley speculates their next target might be a ’small VDSL vendor’. That vendor would be Centillium (CTLM), though I feel it is a better match for suitors other than Cortina.

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Cortina Acquires Immenstar

Andrew Schmitt — Mon, 26 Feb 2007 20:17:12 +0000

Cortina has agreed to acquire Immenstar. I’ve written about both companies extensively (See here and here).

This acquisition is surprising. Cortina previously focused more on the core of the network and has either built or acquired products designed to enable the next generation of WAN equipment for carrier applications. Immenstar is tightly focused on fiber to the home chipsets, a much more access oriented application. I suspect that Cortina is looking to couple it’s carrier class ethernet solutions with Immenstar’s high density OLT solution. Still, it is not a pretty fit.

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Chinese FTTH Silicon Moves Forward

Andrew Schmitt — Wed, 08 Nov 2006 18:45:56 +0000

My five part FTTH in China series discussed the players, technology, and opportunity of FTTH in the worlds fastest growing economy. Teknovus, a private company I follow made an related announcement today. They’ve released the first GE-PON chip compliant with China Telecom’s (CHA) enhanced IEEE GE-PON 802.3ah standard.

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Vitesse Investment Thesis

Andrew Schmitt — Mon, 16 Oct 2006 18:43:46 +0000

I’ve been engaged in constant debate with readers and other investors about my position in Vitesse Semiconductor since disclosing it. Based on reader email, it was one of my more unpopular opinions. I thought it would be appropriate to share my investment thesis from early August with a wider audience.

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PMC Sierra Q306 Revenue Miss

Andrew Schmitt — Mon, 25 Sep 2006 21:45:39 +0000

PMC-Sierra (PMCS) announced a revenue shortfall today. They had guided to $124M and now indicate $116M is more likely. They specifically highlight telecom component demand issues in Asia.

My qualitative information on wireline telecom component demand in China indicates things are going smoothly. It’s possible that PMC’s issues are with GE-PON demand. It’s possible my qualitative info is wrong- Xilinx lowered guidance based on Asian demand and they are a good bellwether.

So, to answer all of you that have asked, I do not know what is going on. At least not yet.

I do not hold any positions with PMC Sierra