Mellanox to Buy Voltaire

By Michael Feldman

November 29, 2010

Voltaire shareholders got an early Christmas present this week. Mellanox Technologies has entered a definite agreement to acquire Voltaire Ltd. for a cash value of $8.75 per share, equivalent to approximately $218 million. The deal would represent the first major consolidation of InfiniBand vendors.

Over the past 12 months, the two public companies have generated combined sales of $217 million, of which approximately 70 percent comes from Mellanox. According to Mellanox CEO Eyal Waldman, the plan is to maintain that revenue stream and leverage the strength of the two companies to turbo-charge the business. During an investor conference call on Monday morning, Waldman repeatedly characterized the acquisition as one that was synergistic and would expand the reach of both companies’ product portfolios. “We believe bringing Voltaire into the Mellanox family is all about accelerating our growth in the marketplace and furthering the breadth and depth of our end-to-end connectivity products for both InfiniBand and Ethernet,” said Waldman. “The demand for more computing power, fast access to storage, efficiency and scalability is accelerating in HPC, enterprise, cloud computing, Internet, and Web 2.0 markets.”

While Voltaire has relied on Mellanox network ASICs for its InfiniBand switch and HCA products, under the merged business the company will be able to offer complete vertically-integrated products in-house. Specifically, Mellanox’s strength in network silicon and HCAs is balanced by Voltaire’s dominance in network switches as well as fabric management and application acceleration software.

In the Ethernet space, Voltaire offers 10GbE switches, while Mellanox produces 10GbE NIC endpoints. “Together we have an end-to-end solution, which until now neither company had,” said Waldman. Voltaire also brings its commercial HPC customer base to the table, including its clients in the financial sector (especially in high frequency trading) and the oil & gas exploration market.

Assuming no regulatory glitches, the deal is expected to close in the first quarter of 2011. According to Waldman, the new entity will retain the employees (numbering around 700) and operating sites of the two companies in both the US and Israel. At least that’s the immediate plan.

Going forward, the addition of Voltaire is estimated to contribute between $0.02 and $0.05 per share in 2011 on a non-GAAP basis — that’s according to Mellanox CFO Michael Gray. By the end of 2012, they expect to realize cost synergies of at least $10 million per year. Since the cost of goods (COG) savings only accounts for about 20 percent of that, with the remainder being operating expenses, it’s likely that there will be some consolidation of personnel and/or sites down the road, although no specific plans have been laid out.

As far as the product roadmap, Waldman said they will work toward integrating the product line “sometime during the second half of 2011.” This applies to both their InfiniBand and Ethernet portfolios. Since InfiniBand FDR and EDR products are on the roadmap in 2011 and 2012, respectively, one can assume that these products will be among the first to be offered under the merged R&D teams.

No doubt some of the motivation behind the acquisition was the growing competition from QLogic, who is expanding into the InfiniBand market at the expense of both Mellanox and Voltaire. And as pointed out by Frank Berry, CEO and senior analyst at IT Brand Pulse, Mellanox was simultaneously selling to and competing with Voltaire, which was working against both interests. “Until now Mellanox was straddling the fence,” he told HPCwire. “They were supplying the dominant switch supplier, Voltaire, with chips, but strangling them at the same time, as they marketed their own switch line. It appears they came to the realization they need Voltaire’s software, sales and marketing to ensure they dominate the InfiniBand switch segment just as they dominate the InfiniBand LOM and HCA segment.”

What Voltaire gets out this is survival. Although company revenues have steadily increased from 2005 to 2008 (with a slight dip during the 2009 recession), Voltaire has recorded net losses over the past five years. Because they cater to a somewhat specialized clientele and had to source chips from Mellanox, operating expenses and product costs have outpaced sales. Essentially, Voltaire was getting squeezed between supplier and part-time competitor Mellanox and full-time competitor QLogic.

Apparently OEMs and customers were behind this deal as well. Waldman said Mellanox consulted with system vendors as well as some key customers, and both groups bestowed their blessing on the transaction. For vendors and end users, the merger makes sense, given that it will be easier to buy network products from one entity rather than two. And if they’re looking for an alternative, there’s always QLogic for InfiniBand, and a host of providers for 10GbE.

“I actually don’t think we’re going to lose any business here,” said Waldman. “We’re going to gain business because it will be much easier to get an end-to-end solution.”

Subscribe to HPCwire's Weekly Update!

Be the most informed person in the room! Stay ahead of the tech trends with industy updates delivered to you every week!

Nvidia Debuts Turing Architecture, Focusing on Real-Time Ray Tracing

August 16, 2018

From the SIGGRAPH professional graphics conference in Vancouver this week, Nvidia CEO Jensen Huang unveiled Turing, the company's next-gen GPU platform that introduces new RT Cores to accelerate ray tracing and new Tenso Read more…

By Tiffany Trader

HPC Coding: The Power of L(o)osing Control

August 16, 2018

Exascale roadmaps, exascale projects and exascale lobbyists ask, on-again-off-again, for a fundamental rewrite of major code building blocks. Otherwise, so they claim, codes will not scale up. Naturally, some exascale pr Read more…

By Tobias Weinzierl

STAQ(ing) the Quantum Computing Deck

August 16, 2018

Quantum computers – at least for now – remain noisy. That’s another way of saying unreliable and in diverse ways that often depend on the specific quantum technology used. One idea is to mitigate noisiness and perh Read more…

By John Russell

HPE Extreme Performance Solutions

Introducing the First Integrated System Management Software for HPC Clusters from HPE

How do you manage your complex, growing cluster environments? Answer that big challenge with the new HPC cluster management solution: HPE Performance Cluster Manager. Read more…

IBM Accelerated Insights

Super Problem Solving

You might think that tackling the world’s toughest problems is a job only for superheroes, but at special places such as the Oak Ridge National Laboratory, supercomputers are the real heroes. Read more…

NREL ‘Eagle’ Supercomputer to Advance Energy Tech R&D

August 14, 2018

The U.S. Department of Energy (DOE) National Renewable Energy Laboratory (NREL) has contracted with Hewlett Packard Enterprise (HPE) for a new 8-petaflops (peak) supercomputer that will be used to advance early-stage R&a Read more…

By Tiffany Trader

STAQ(ing) the Quantum Computing Deck

August 16, 2018

Quantum computers – at least for now – remain noisy. That’s another way of saying unreliable and in diverse ways that often depend on the specific quantum Read more…

By John Russell

NREL ‘Eagle’ Supercomputer to Advance Energy Tech R&D

August 14, 2018

The U.S. Department of Energy (DOE) National Renewable Energy Laboratory (NREL) has contracted with Hewlett Packard Enterprise (HPE) for a new 8-petaflops (peak Read more…

By Tiffany Trader

CERN Project Sees Orders-of-Magnitude Speedup with AI Approach

August 14, 2018

An award-winning effort at CERN has demonstrated potential to significantly change how the physics based modeling and simulation communities view machine learni Read more…

By Rob Farber

Intel Announces Cooper Lake, Advances AI Strategy

August 9, 2018

Intel's chief datacenter exec Navin Shenoy kicked off the company's Data-Centric Innovation Summit Wednesday, the day-long program devoted to Intel's datacenter Read more…

By Tiffany Trader

SLATE Update: Making Math Libraries Exascale-ready

August 9, 2018

Practically-speaking, achieving exascale computing requires enabling HPC software to effectively use accelerators – mostly GPUs at present – and that remain Read more…

By John Russell

Summertime in Washington: Some Unexpected Advanced Computing News

August 8, 2018

Summertime in Washington DC is known for its heat and humidity. That is why most people get away to either the mountains or the seashore and things slow down. H Read more…

By Alex R. Larzelere

NSF Invests $15 Million in Quantum STAQ

August 7, 2018

Quantum computing development is in full ascent as global backers aim to transcend the limitations of classical computing by leveraging the magical-seeming prop Read more…

By Tiffany Trader

By the Numbers: Cray Would Like Exascale to Be the Icing on the Cake

August 1, 2018

On its earnings call held for investors yesterday, Cray gave an accounting for its latest quarterly financials, offered future guidance and provided an update o Read more…

By Tiffany Trader

Leading Solution Providers

SC17 Booth Video Tours Playlist

Altair @ SC17

Altair

AMD @ SC17

AMD

ASRock Rack @ SC17

ASRock Rack

CEJN @ SC17

CEJN

DDN Storage @ SC17

DDN Storage

Huawei @ SC17

Huawei

IBM @ SC17

IBM

IBM Power Systems @ SC17

IBM Power Systems

Intel @ SC17

Intel

Lenovo @ SC17

Lenovo

Mellanox Technologies @ SC17

Mellanox Technologies

Microsoft @ SC17

Microsoft

Penguin Computing @ SC17

Penguin Computing

Pure Storage @ SC17

Pure Storage

Supericro @ SC17

Supericro

Tyan @ SC17

Tyan

Univa @ SC17

Univa

  • arrow
  • Click Here for More Headlines
  • arrow
Do NOT follow this link or you will be banned from the site!
Share This