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Mellanox plumps up thanks to the storage world's hankering for high-speed Ethernet

Dell EMC and HPE help fuel record quarterly revenue

High-speed Ethernet biz Mellanox has posted record revenues for the second quarter of fiscal year 2018, driven in part by Dell EMC and HPE's seeming insatiable appetite for Ethernet switches.

Sales for Q2 ended 30 June was up by 26.7 per cent to $268.4m, which chief exec Eyal Waldman put down to its "25 gigabit per second and above" kit being slurped more widely across the cloud and HPC markets.

Profits came in at $16.5m, a healthy increase over Q2 FY2017's loss of $7.9m.

Mellanox's financial history is one of steady growth, less a three-quarter-long blip between the end of FY2016 and the first half of FY2017, as previously reported.

"We believe we are in the early stages of our transition from 10-gigabit per second to 25-gigabit per second and above and our products are well-suited to capture market share in this transition," boasted Waldman in the conference call with financial analysts.

Revenues from the company's other flagship thing, Infiniband, were "flat sequentially" at $102.1m, having dipped last year. "We remain confident Infiniband will grow in low single-digits for the year," said Waldman on the call. Temporary chief beancounter Eric Johnson revealed that Infiniband revenues made up "approximately 38 per cent of revenues in Q2 18, down from 41 per cent of revenues" in the first quarter of the year, with Waldman telling analysts: "We think that InfiniBand will the stay the main interconnect for HPC, artificial intelligence and back-end storage."

Ethernet revenues, in contrast, made up a chunky "59 per cent of second quarter revenues" in Johnson's words. Research and development spending was down a touch, from $92m in Q2 FY17 to $87m this year.

Cash from Dell EMC and HPE's combined custom made up more than a quarter (27 per cent) of Mellanox's revenues for the latest quarter, with Dell EMC contributing 14 per cent – around $37.6m – of that sum. The firm expects to have a second cloud customer for Ethernet switches by the second half of this year.

Johnson forecast revenues of "$270m to $280m" for the third quarter of this fiscal year, with a predicted full-year operating margin of between 23 and 24 per cent on revenues of $1.65bn to $1.86bn.

In response to analyst questions, Waldman said he expected Mellanox to start shipping its HDR systems "in the second half of 2018". ®

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