Kishore Seendripu, chief executive officer, and Adam C. Spice, chief financial officer, presented at the 34th Annual Growth Stock Conference in Chicago. Overall, we came away from the presentation positive as we believe there are several catalysts unfolding in favor of the company’s growth. Some of these include DOCSIS 3.0 cable content increases via higher channel counts (where we believe MaxLinear has highly differentiated solutions) and continued progress in terms of market expansion (satellite). Bottom line, we maintain our positive bias toward the company and believe investors should own this name.
We reiterate our Outperform rating. Management tone continues to be positive on Satellite front: The company reaffirmed its competitive strength in the satellite market and continues to believe that the segment will contribute 10% of total revenue exiting the year. In addition, we came away incrementally positive on the company’s competitive position on the Outdoor Unit (ODU) side of the business as management highlighted key design wins with most of the players in that space.
While the company will generate revenue from the satellite gateway in 2014, MaxLinear will experience a ramp up in ODU revenue beginning in 2015. MaxLinear continues to see growth in its cable business. On the data side, customers are seeking higher content 24-channel solutions, and we believe MaxLinear is benefiting disproportionately. Based on our interactions with the industry, we believe the likelihood of the industry transitioning from the 8-channel to the 24-channel (and skipping the 16-channel solutions altogether) is a likely scenario, which, in turn, is a strong positive for the company.
The company reiterates 90% visibility for June quarter: Consistent with the company’s March earnings call, management reiterated its visibility heading into the June quarter largely driven by continued strength in the Cable business being aided by incremental satellite revenues (expected to be in the $5 million to $10 million range for the year).