Why It's the Right Time for EZchip

Israeli router chip company EZchip Semiconductor Ltd. (EZCH) supplies, via its Yokne’am neighbor Marvell (MRVL), the chips for Cisco’s new routers. These are advanced routers currently undergoing checks and trials at many Cisco (CSCO) customers, particularly the giant telecommunications companies. For EZchip, this probably means that it is on the eve of a strong boost to sales and profits. The growth will come all at once in one of the coming quarters.

This being the case, I am exploiting EZchip’s low share price, and tripling my investment in it. I added EZchip to my portfolio exactly three years ago, when I wrote that the train was leaving the station, and that after many years of development, the company was on a strong growth track. This indeed is what happened, mainly because of Juniper Networks (JNPR), which built its MX family of routers around the second generation of EZchip chips. Along the way, I took advantage of the steep rise in the share price, and sold half my holding at a large profit.