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Comms chips

That Gilder Touch

2:45 PM -- Left over from our 2006 Top Stocks list, here's one that just missed the cut. It's a story of the same George Gilder pixie dust that once raised Avanex Corp. (Nasdaq: AVNX) to $270 per share. (No, there's no decimal point missing.)

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

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sfwriter 12/5/2012 | 3:17:06 PM
re: That Gilder Touch That's the first I've heard of Gilder in awhile. The bubble must be back.

Last time I saw Gilder was in the Fall of 1999, he was proclaiming to the investors at his Telecosm conference that there would be no bandwidth glut. Meanwhile, Joe Nacchio was sitting next to me biting his nails.

I think I'd take Gilder's pearls of wisdom with a grain of salt.
sfwriter 12/5/2012 | 3:17:05 PM
re: That Gilder Touch Gilder suffers from a little more than the forecaster's dilemma. Gilder told Wired Magazine back in 2002 that he saw the Nasdaq crash coming but never bothered to share that insight with the 75,000 or so readers of the Gilder Technology Report, many of whom suffered huge losses. Of course, he suffered financially as well, since he invested in the companies he touted in his newsletter.

But, I suppose if you want some solid thinking on anti-feminism (he's written 4 books on the topic) and intelligent design, he's your man.



geof hollingsworth 12/5/2012 | 3:17:05 PM
re: That Gilder Touch The man is a front-running charlatan, but a very slick one. His only professional qualification is as a speechwriter for Richard Nixon, and we all know how that worked out. I can't believe anyone takes him seriously.
slideruler 12/5/2012 | 3:17:05 PM
re: That Gilder Touch Actually, from a macro perspective - Gilder has always provided some solid thinking....the problem arises when he (or his team) attempts to translate good macro-directional thinking into stock picks. I wouldn't drop by my local supply-side economist for stock picks either.

Bottom line - he suffers from the "forecaster's dilema": give'em a number, or give'em a date...but never both. By picking a stock like this, you inherently break this rule and are likely to get your a** fried (unless you have some very, very good inside information).

As a general rule, I take anybody's technology prognostications with (several) grains of salt.

SR.
sfwriter 12/5/2012 | 3:17:03 PM
re: That Gilder Touch True, the fact that he's said he wants to be America's number-one anti-feminist irritates me.

But I've never invested in individual stocks, so his advice means little to me personally.
slideruler 12/5/2012 | 3:17:03 PM
re: That Gilder Touch Sounds like its a personal thing....
Scott Raynovich 12/5/2012 | 3:17:01 PM
re: That Gilder Touch according to some information I saw, he went bankrupt based on the afore-mentioned investments.

I noticed he's still running his confab in Lake Tahoe. Does anybody still go? Anybody out there know what happened there last time?
lightreceding 12/5/2012 | 3:17:01 PM
re: That Gilder Touch Gilder writes good SciFi. He gets us thinking about the possibilities or the impossibilities. It's when he starts thinking that he is talking reality that there is a problem. Gilder should never be making stock picks.
techradar 12/5/2012 | 3:17:00 PM
re: That Gilder Touch get the facs straight. ezchip has over 90 design wins, AMCC has zero biz in 10G, INTC shut down their NPU effort, BRCM bought sandburst some ex csco guys that had a lost the business, and MRVL now partnering w ezchip. wonder why ??
Scott Clavenna 12/5/2012 | 3:16:59 PM
re: That Gilder Touch Andrew Schmitt liked it, it seems.

http://www.nyquistcapital.com/...
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