That Gilder Touch
This time, it was LanOptics Ltd. (Nasdaq: EZCH) receiving the Gilder blessing, being named one of his top picks for 2007 some months ago. That might have helped the stock climb after stalling in late summer, up 175 percent in calendar 2006 to $13.96. Eat your heart out, Jim Cramer.
LanOptics doesn't really do anything. It's a shell whose only remaining asset is a 60.4 percent stake in EZchip Technologies Ltd. (Nasdaq: EZCH), the 10-Gbit/s network processor company that's managed to survive the downturn and outlast a host of forgotten rivals. (See, for instance, Cogni-Gone?.)
The bandwidth and QOS requirements of video spell good news for EZchip, Gilder's newsletter reckons, as more complex network processors become necessary for router linecards. It helps, too, that the oft-told tale of OEMs trading in ASICs for off-the-shelf network processors is finally coming true. (See Ethernet Spurs Net Processors and Net Processors Bloom at 10-Gig.)
Having not read the newsletter entry, I don't know whether Gilder's guys explain why this points to success for EZchip, as opposed to fellow startups Bay Microsystems Inc. and Xelerated Inc. or even non-startups Agere Systems Inc. (NYSE: AGR.A), Applied Micro Circuits Corp. (Nasdaq: AMCC), and Intel Corp. (Nasdaq: INTC).
Maybe the logic included rumored EZchip wins at Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (NYSE: JNPR). (See Juniper Makes Its Ethernet Move.) More likely, LanOptics just happens to be the only publicly traded stock that's directly affected by network processor sales.
Of course, the Gilder touch doesn't always work. He couldn't save Xanoptix from its death spiral, and recommendations of Corvis and Sorrento didn't exactly pan out. (See Xanoptix Closes $15.2M C Round, Gilder Backs Corvis, and Sorrento Rides a Gilded Wave.)
By the way... At last check, Xanoptix still existed, kind of. It became Cubic Wafer and moved shop to Austin, Texas, still going after the "3D semiconductor" model. You can catch up with them at the old www.xanoptics.com site.
— Craig Matsumoto, Senior Editor, Light Reading