Starboard Value has reportedly taken a 10.7 percent stake in interconnect specialist Mellanox Technologies, and according to the Wall Street Journal, has urged the company “to improve its margins and stock and explore a potential sale.”
The WSJ article, written by David Benoit, reports, “The New York activist investor has a long record of successful semiconductor investments, highlighted earlier Monday by Marvell’s $6 billion deal for Cavium Inc., less than two years after Starboard arrived and the company promptly ousted its founders. The deal helped send Marvell stock higher, and it has now returned about 157% since before Starboard arrived in February 2016, compared with roughly 127% from the iShares Semiconductor exchange-traded fund.”
According to the report, Starboard believes Mellanox spends too much on research and development, among other things, to try to grow revenue, “sacrificing margins compared with peers, according to people familiar with the matter.”
Mellanox is a leading provider of HPC interconnect technology, offering both InfiniBand and Ethernet products. In 2016, it purchased network chip company EZchip (which had earlier acquired multicore processing specialist Tilera) and has been incorporating its technology (see HPCwire article, Mellanox Spins EZchip/Tilera IP Into BlueField Networking Silicon, and EnterpriseTech coverage, Mellanox Ethernet/ARM NICs Lighten CPU Burden).
Shares of Mellanox are up 5.8 percent after hours.
Link to Wall Street Journal article: https://www.wsj.com/articles/starboard-value-takes-10-7-stake-in-mellanox-technologies-1511216509