Monday, November 13, 2006

Calls of Note Part 6

- Deutsche Bank has been on the road with Atheros Comm (NASDAQ:ATHR) and conducting industry checks. They believe near-term trends are positive and the company's long-term growth strategy is compelling. In between this quarter and the long-term, the road may not be entirely smooth, but the firm remains positive on the overall outlook.

Firm's checks indicate that the quarter is tracking well. The company is levered to PC OEMs, and there are signs that they are broadening their availability of higher-margin 802.11n products. They think ATHR will gain share in Q4 in 802.11n. Firm also believes that concerns over PAS subscriber growth in China overlook seasonal buying patterns and upgrade cycle of over 93 million subscribers.

ATHR is looking for ways to expand beyond its core in WLAN. By this time next year they will be generating revenue from five product categories including core WLAN, mobile WLAN (ROCm), PAS, Ethernet switching and a new area - to be announced in January. Ultimately they hope to grow into a diversified supplier of semiconductors for digital communications. While this fate is far from certain, even Broadcom and Marvell were once small companies.

They are raising their price target from $23 to $25 on raised 2007 estimates and a better view into 2008.

Notablecalls: Nothing really new in this note but I think we may see some buy interest in ATHR.

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