MSPD - Mindspeed Technologies

[LanceSanity]

YCOMBINATOR seems to have high conviction in a positive outcome from MSPD's strategic alternatives. He believes the company is likely to be acquired because it is sub-scale and is worth more to an acquirer. Here's the VIC write-up: http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/101252

 

Mindspeed has a strong portfolio of products. Comments from Q3 2013 cc:

Within the video segment, we are winning designs with our new 3G and 6G SDI components with customers quickly ramping to production, emphasizing the pull for higher performance HD and new HD solutions. Our share gains in the video market are enabled by a state-of-the-art crosspoint switches and SDI components. We expect the 4K ultra high-definition TV to drive an infrastructure upgrade cycle, which supports this new viewing experience. Mindspeed is leading the interface in switching upgrades for this inflection point by offering highly integrated low-power 4K SDI and crosspoint silicon.

 

Another factor driving our success in HPA is our broad portfolio of PMDs targeting FTTx infrastructure. Although later than expected, the new China fiber-to-the-home tenders have now been awarded, and we expect shipments to start ramping this quarter. We believe this will lead to a stronger calendar second half in China and a pickup in revenue for our next-generation PMD devices, targeting both ONUs and OLTs for GPON and GEPON.

 

Lastly, the HPA team is making significant strides with its high-speed portfolio targeting the enterprise space with continued design wins at Tier 1 OEMs. Mindspeed's portfolio of crosspoint switches reduces latencies while our CDRs and PMDs are enabling higher port densities by offering the industry's lowest power consumption.

 

Moving on to our to communications process. CPU revenue represented 50% of our Q3 revenues and reached nearly $18 million in our fiscal third quarter, up 3% sequentially. We continue to focus on increasing market share in our core service provider provision broadband home router, or BHR market.

 

Mindspeed recently secured 2 BHR wins with leading North American and European service providers. At the same time, we recorded a follow-up diversification design win with our Tier 1 storage customer for Consumer NAS or CNAS when the original will beginning shipment in this current fourth fiscal quarter. We are gaining incremental traction at additional storage and machine-to-machine suppliers. We expect our share in Japan to grow meaningfully and the fiber-to-the-home markets from our already large 2/3 share today. We are also seeing continued demand for our Voice-over-IP products as carriers transition to Voice-over-LTE or VoLTE, and also, we expand our IP PBX platform, solidified with a new design win last quarter as the top 3 IP-PBX market share leader.

 

And finally, let me update you on our wireless infrastructure business, which accounted for $2.6 million or 7% of Q3 revenues, in line with our forecast. As we look forward, we are seeing strength in this business with our backlog coverage at this time above where we were last quarter. That said, our general expectations for this market have not shifted from the update we provided last quarter. Carriers worldwide remained committed to small cell deployments, and we expect that this market will ramp meaningfully.

 

However, we expect the 4G LTE small cell market to be lumpy as new deployments later on. Continued advanced features and real carrier deployments of our small cell solutions are positioning us well for continued deployments in Korea and the follow-on deployments in Japan and the U.S. Our hardened carrier grade software and our design knowledge from real world small cell deployments are further putting us ahead of our competitors and maintaining or improving our market share. In fact, we scored an additional 5 LTE design engagements in the quarter, bringing our total to 40 LTE design engagements to date. Importantly, 2 of these were for TD-LTE.

 

Furthermore, we also scored 6 TD-SCDMA design engagements. As it appears, China will begin rolling out their version of 3G small cells in the future. As with 4G LTE however, we will not be commenting as to the specific timing of these rollouts.

 

We believe we are well positioned in all 3 major markets in which we compete. In small cells, we lead the market and has carrier-proven technology for typically risk-averse service providers, enabling a smoother testing and deployment cycle for our OEM customers.

 

In communications processors, we are expanding our market presence with beyond the BHR and customer premise equipment or CPE market, including major design wins with the CNAS customers. And our HPA product line continues to open new opportunities and take share in new markets, driven by a strong portfolio of crosspoint switches, signal conditioners and optical PMDs.

[ItsAValueTrap]

Hmm 4K SDI is not a technology I'd want to bet on.

 

In cinemas, 4K has largely been a flop because nobody cares.  Cinemas nowadays are either film, 2K, 4K, or stacked 2K which is somewhere between 2K and 4K (Imax).  Sony has a list of 4K movies on their website somewhere.  But anyways, the point is that most movie goers don't notice the difference between 4K, 2K, and Imax's stacked 2K.  So Sony stopped advertising 4K as a selling point for their feature films.

 

If 4K isn't being noticed in theatres, I doubt that it will really take off for cable/broadcast.  4K SDI is for the cable and broadcast industry... I think that it will be a very, very long time before it is adopted.  (The TV engineers started working on HD in the 80s and they thought it was going to be analog.  Roughly two decades later, HD is being adopted and it's digital.)  This will make it hard for Mindspeed to recoup its investment because the cash flows are way too far into the future.  I think that they are betting on the wrong technology.

[LanceSanity]

http://finance.yahoo.com/news/mindspeed-announces-definitive-agreement-acquired-212200728.html

 

Acquired for $5.05/share cash :)

[stahleyp]

Nice,  Lance! Congrats! :)

[hardincap]

This took way longer than I expected, but I'm glad management made the right decision. They dont exactly have a good track record.