Monday, September 11, 2006

Calls of Note Part 6

- First Albany expects Atheros Communications (NASDAQ:ATHR) to post a strong quarter and provide strong guidance on the back of a strong PC market and market share gains in 802.11g. While 802.11n and the PAS markets will likely be down in 3Q, the weakness is reflected in firm's model and guidance. They expect business to accelerate in 4Q on the back of strong
seasonality and increasing PAS penetration.

Firm believes it is clear from their checks that the 802.11 market will be strong this quarter, and expect 802.11 units to grow 12% to 15% in 3Q and dollar revenue to increase 9% to 12%, as pricing has remained relatively benign with low signal digit sequential price declines.

ATHR is currently trading at $15.35, or at 2.2x CY06 enterprise value to sales and at 1.8x CY07 estimates. Historically, the shares have bottomed at roughly 2x EV to sales.

Notablecalls: Would not be surprised to see a bit out of bounce.

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