The network processor vendor is a public company and gets most of its revenues from just a couple of sources, which makes for a revealing combination around earnings time.
EZchip is publicly saying its NP network processors -- the packet-forwarding chips that sit on switch/router linecards -- are being used in the Juniper Networks Inc. (NYSE: JNPR) MX series of routers.
EZchip is not disclosing that Cisco is a customer, nor is it saying that its chips are used in the ASR. Both facts are pretty well known, though. (See Chipping Away at Cisco's ASR 9000.)
CEO Eli Fruchter, both in the past and during this mornings fourth-quarter earnings call, keeps referring to business with "the other" major router vendor that's not Juniper. (Alcatel-Lucent (NYSE: ALU), if you want to be a smark aleck, denies that it uses any vendor's network processors.)
EZchip isn't revealing all the deep, dark secrets about the router vendors' progress, but it's providing some tidbits. Juniper, for instance, has been shipping new linecards for the MXs and is also using EZchip in a security platform, Fruchter said.
Juniper is by far EZchip's largest customer, representing about 55 percent of EZchip's $9.6 million revenues in the fourth quarter, which ended Dec. 31, and a like percentage of the company's $33.6 million revenues for 2008. (See EZchip Reports Q4.)
Cisco -- rather, the "other" company -- will probably be EZchip's biggest customer in the long term, though. Fruchter confirmed that a particular router -- probably the ASR 9000 -- should be ready for first customer shipments in the first quarter of 2009. That would match the schedule Cisco originally gave.
Fruchter also reiterated that the NP4, EZchip's latest chip, should start sampling in the second quarter of 2009.
EZchip was one of the few companies to report revenues increasing at the end of the quarter, showing little effect of the recession. "To date, the short-term impact has been fairly minimal," Fruchter said.
Table 1: EZchip's Earnings Track
|Revenues ($M)||Net Income (GAAP) ($M)||Earnings Per Share|
Fruchter wouldn't give any sales forecasts, citing an unpredictable economy and the looming spending cuts by major carriers. But considering a couple of key customer products are in their infancy, he said: "I believe EZchip can grow in 2009, despite the economic downturn."
EZchip reported net income of $1 million, or 4 cents per share, for the fourth quarter. The company's stock was down 30 cents (1.9%) at $15.90 today.
— Craig Matsumoto, West Coast Editor, Light Reading